Wear Company is operating at 70% of its manufacturing capacity of 78,000 product units per year. A customer has offered to buy an additional 18,000 units at $41 each and sell them outside the country so as not to compete with Wear Company. The following data are available: $\begin{array}{lrr}\text { Costs at } 70 \% \text { Capacity: }&\text { Per }&\text { Total }\&\text { Unit }\
\text { Direct materials } & \$ 28.00 & \$ 1,528,800 \
\text { Direct labor } & 3.00 & 163,800 \
\text { Overhead (fixed and variable) } & 7.00 & \underline{382,200} \
\hline\text { Totals }&\$38.00&\$2,074,800
\end{array}$
In producing 18,000 additional units fixed overhead costs would remain at their current level but incremental variable overhead costs of $1.28 per unit would be incurred. What is the effect on total income if Wear Company accepts this order?

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The Answer of Wear Company is operating at 70% of its manufacturing capacity of 78,000 product units per year. A customer has offered to buy an additional 18,000 units at $41 each and sell them outside the country so as not to compete with Wear Company. The following data are available: $\begin{array}{lrr}\text { Costs at } 70 \% \text { Capacity: }&\text { Per }&\text { Total }\&\text { Unit }\
\text { Direct materials } & \$ 28.00 & \$ 1,528,800 \
\text { Direct labor } & 3.00 & 163,800 \
\text { Overhead (fixed and variable) } & 7.00 & \underline{382,200} \
\hline\text { Totals }&\$38.00&\$2,074,800
\end{array}$
In producing 18,000 additional units fixed overhead costs would remain at their current level but incremental variable overhead costs of $1.28 per unit would be incurred. What is the effect on total income if Wear Company accepts this order?

Wear Company Is Operating at 70% of Its Manufacturing Capacity