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What is the impact on operating income

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Question - Slippy Corporation, the worldwide leader in slipper manufacture, manufactures slippers and sells them for 9$ a pair. Variable manufacturing cost is 5$ a pair (this includes labor, raw materials and variable overhead) and fixed manufacturing cost is $150,000. Slippy has enough idle capacity available to accept a one-time special order of 20,000 pairs of slippers at $7 a pair. Slippy will not incur any additional marketing or other-fixed costs as part of this special order.

Required -

1. Should Slippy Corp take the order? Why or why not?

2. What is the impact on operating income if they were to take this order?

Reference no: EM133049927

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