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What will be the change in operating income

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Reference no: EM132100432

Question - Do the Hustle Company, a manufacturer of bell bottom jeans, has the capacity to produce 15,000 pairs of jeans each month. Current production and sales are 10,000 pairs per month at a selling price of $15 each. Based on this level of activity, the following unit costs are incurred:

Direct Materials $5.00

Direct Labor $3.00

Variable MOH $0.75

Fixed MOH $1.50

Hustle has received a special order from a customer who wants to pay a reduced price of $10 per pair of jeans for an order of 6,000 pairs of jeans. If the special order is accepted, what will be the change in operating income?

A. increase of $5,000

B. increase of $1,250

C. decrease of $6,250

D. decrease of $30,000

E. increase of $7,500

Reference no: EM132100432

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