Whispering Winds's income will increase by $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Whispering Winds Company is a leading manufacturer of sunglasses. One of Whispering Winds's products protects the eyes from
ultraviolet rays. An upscale sporting goods store has contacted Whispering Winds about purchasing 29,900 pairs of these sunglasses.
Whispering Winds's unit manufacturing cost, based on a full capacity of 254,000 units, is as follows:
Direct materials
Direct labor
Manufacturing overhead (75% fixed)
Total manufacturing costs
$7
5
19
$31
Whispering Winds also incurs selling and administrative expenses of $75,400 plus $3 per pair for sales commissions. The company has
plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Whispering Winds's normal price for these sunglasses
is $42 per pair. The sporting goods store has offered to pay $36 per pair. Since the special order was initiated by the sporting goods
store, no sales commission will be paid.
What would be the effect on Whispering Winds's income if the special order were accepted?
Whispering Winds's income will increase by $
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