Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units: The company has the capacity to produce 90,000 units.The product regularly sells for $120.
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If a wholesaler offered to buy 4,500 units for $100 each, the effect of the special order on income would be a
A) $153,000 increase.
B) $45,000 increase.
C) $450,000 increase.
D) $90,000 decrease.

Question

Walton Company manufactures a product with the following costs per unit at the expected production level of 84,000 units:  The company has the capacity to produce 90,000 units.The product regularly sells for $120.
-
If a wholesaler offered to buy 4,500 units for $100 each, the effect of the special order on income would be a
A) $153,000 increase. 
B) $45,000 increase. 
C) $450,000 increase. 
D) $90,000 decrease.

Quizplus · Accepted Answer

The increase in income is calculated by multiplying the number of units (4,500) by the price per unit ($100), resulting in a $450,000 increase in revenue. Subtracting the cost of goods sold or any additional costs associated with the order would determine the net effect on income, but the question implies a straightforward revenue increase.

Walton Company Manufactures a Product with the Following Costs Per