Your Company has just obtained a request for a special order of 6,000 units to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 units per month with total fixed production costs of $144,000.  At present, the company is selling 80,000 units per month through regular channels at a selling price of $11 each. For these regular sales, the cost for one unit is:                           Variable production cost ... $4.60                         Fixed production cost ......    1.80                         Variable selling expense ...  1.00   If the special order is accepted, Your Company will not have any selling expense; however, it will have shipping costs of $0.30 per unit.  What is the increase in net operating income if Your Company accepts this special order? a. $12,600. b. $14,400. c. $3,600.   d. $1,800.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Your Company has just obtained a request for a special order of 6,000 units to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 units per month with total fixed production costs of $144,000.  At present, the company is selling 80,000 units per month through regular channels at a selling price of $11 each. For these regular sales, the cost for one unit is:
 
                        Variable production cost ... $4.60
                        Fixed production cost ......    1.80
                        Variable selling expense ...  1.00
 
If the special order is accepted, Your Company will not have any selling expense; however, it will have shipping costs of $0.30 per unit.  What is the increase in net operating income if Your Company accepts this special order?

a. $12,600.

b. $14,400.

c. $3,600.  

d. $1,800.

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