A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: $$\begin{array} { l r }
\text { Direct materials } & \$ 4 \
\text { Direct labor } & 10 \
\text { Variable overhead } & 8 \
\text { Fixed overhead } & 6
\end{array}$$ A foreign company wants to purchase 2,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is
A)$6,000.
B)$2,000.
C)$(6,000).
D)$(2,000).

Question

A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: $$\begin{array} { l r } 
\text { Direct materials } & \$ 4 \
\text { Direct labor } & 10 \
\text { Variable overhead } & 8 \
\text { Fixed overhead } & 6
\end{array}$$ A foreign company wants to purchase 2,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is
A)$6,000.
B)$2,000.
C)$(6,000).
D)$(2,000).

Quizplus · Accepted Answer

The Answer of A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units: $$\begin{array} { l r } 
\text { Direct materials } & \$ 4 \
\text { Direct labor } & 10 \
\text { Variable overhead } & 8 \
\text { Fixed overhead } & 6
\end{array}$$ A foreign company wants to purchase 2,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $4,000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is
A)$6,000.
B)$2,000.
C)$(6,000).
D)$(2,000).

A Company Contemplating the Acceptance of a Special Order Has