The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7; and fixed overhead, $4 (based on normal capacity). The company has received a special order for 11,900 units at a unit sales price of $23. There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs. If the order is accepted, operating income will
A) increase by $11,900.
B) decrease by $35,700.
C) increase by $23,800.
D) decrease by $23,800.

Question

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The Answer of The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7; and fixed overhead, $4 (based on normal capacity). The company has received a special order for 11,900 units at a unit sales price of $23. There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs. If the order is accepted, operating income will
A) increase by $11,900.
B) decrease by $35,700.
C) increase by $23,800.
D) decrease by $23,800.

The Normal Selling Price of Our Product Is $42 Per