Tunnel Incorporated provided the following information regarding its single product: The regular selling price for the product is $80. The annual quantity of units produced and sold is 42,000 units (the costs above relate to the 42,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 5000 units at a sale price of $56 per product? (Round any intermediary calculations to the nearest cent.)
A)Increase by $176,450
B)Increase by $383,550
C)Decrease by $176,450
D)Decrease by $383,550

Question

Tunnel Incorporated provided the following information regarding its single product:  The regular selling price for the product is $80. The annual quantity of units produced and sold is 42,000 units (the costs above relate to the 42,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 5000 units at a sale price of $56 per product? (Round any intermediary calculations to the nearest cent.)
A)Increase by $176,450 
B)Increase by $383,550 
C)Decrease by $176,450 
D)Decrease by $383,550

Quizplus · Accepted Answer

The Answer of Tunnel Incorporated provided the following information regarding its single product:  The regular selling price for the product is $80. The annual quantity of units produced and sold is 42,000 units (the costs above relate to the 42,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 5000 units at a sale price of $56 per product? (Round any intermediary calculations to the nearest cent.)
A)Increase by $176,450 
B)Increase by $383,550 
C)Decrease by $176,450 
D)Decrease by $383,550

Tunnel Incorporated Provided the Following Information Regarding Its Single Product