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.
Correct Answer:
Verified
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