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Find what the effect on operating income would be a

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Reference no: EM132556209

Missoula Industries manufactures a product with the following costs per unit at the expected production of 30,000 units:

Direct materials $5

Direct labor 15

Variable manufacturing overhead 8

Fixed manufacturing overhead 6

The company has the capacity to produce 60,000 units. The product regularly sells for $45. A wholesaler has offered to pay $40 each for 2,000 units.

Question 1: If Missoula is at capacity and the special order is accepted, the effect on operating income (profit) would be a

Option A. $10,000 decrease

Option B. $24,000 increase

Option C. $34,000 increase

Option D. $12,000 decrease

Reference no: EM132556209

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