Gundy Company manufactures a product with the following costs per unit at the expected production of 30,000 units: The company has the capacity to produce 30,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 per unit for 2,000 units.
If the firm chooses to accept the special order and reject some regular sales, the effect on operating income would be
A) a $20,000 increase.
B) a $16,000 decrease.
C) a $4,000 increase.
D) $-0-.

Question

Gundy Company manufactures a product with the following costs per unit at the expected production of 30,000 units:  The company has the capacity to produce 30,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 per unit for 2,000 units.
If the firm chooses to accept the special order and reject some regular sales, the effect on operating income would be
A) a $20,000 increase. 
B) a $16,000 decrease. 
C) a $4,000 increase. 
D) $-0-.

Quizplus · Accepted Answer

The Answer of Gundy Company manufactures a product with the following costs per unit at the expected production of 30,000 units:  The company has the capacity to produce 30,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 per unit for 2,000 units.
If the firm chooses to accept the special order and reject some regular sales, the effect on operating income would be
A) a $20,000 increase. 
B) a $16,000 decrease. 
C) a $4,000 increase. 
D) $-0-.

Gundy Company Manufactures a Product with the Following Costs Per