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The Management of Garland Inc

Question 10

Multiple Choice

The management of Garland Inc. is considering whether or not to accept a special sales order for 500 Units of a product at a sales price of $900 per unit. Management has been provided the ollowing data Regarding the manufacturing and selling costs per unit:
The management of Garland Inc. is considering whether or not to accept a special sales order for 500 Units of a product at a sales price of $900 per unit. Management has been provided the  ollowing data Regarding the manufacturing and selling costs per unit:   Management has been informed that variable selling costs pertaining to the special sales order will be Reduced by 20%. Management has also been informed that 250 units of sales to regular customers will Be lost; the sales to regular customers create a contribution margin of $500 per unit. Should Garland's Management accept the special sales order? A)  Yes, because operating income will increase $157,500. B)  No, because operating income will decrease $92,500. C)  Yes, because operating income will increase $32,500. D)  No, because operating income will decrease $47,000. Management has been informed that variable selling costs pertaining to the special sales order will be Reduced by 20%. Management has also been informed that 250 units of sales to regular customers will Be lost; the sales to regular customers create a contribution margin of $500 per unit. Should Garland's Management accept the special sales order?


A) Yes, because operating income will increase $157,500.
B) No, because operating income will decrease $92,500.
C) Yes, because operating income will increase $32,500.
D) No, because operating income will decrease $47,000.

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