Reference no: EM133004741

Problem 1: The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7; and fixed overhead, $4 (based on normal capacity). The company has received a special order for 14,200 units at a unit sales price of $23. There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs. If the order is accepted, operating income will

A) decrease by $28,400.
B) increase by $28,400.
C) increase by $14,200.
D) decrease by $42,600.