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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 6
(2010 CPA Exam) A company is offered a one-time special order for its product and has the capacity to take this order without losing current business. Variable costs per unit and fixed costs in total will be the same. The gross profit for the special order will be 10 percent, which is 15 percent less than the usual gross profit. What impact will this order have on total fixed costs and operating income?
A) Total fixed costs increase, and operating income increases.
B) Total fixed costs do not change, and operating income does not change.
C) Total fixed costs do not change, and operating income increases.
D) Total fixed costs increase, and operating income decreases.
A) Total fixed costs increase, and operating income increases.
B) Total fixed costs do not change, and operating income does not change.
C) Total fixed costs do not change, and operating income increases.
D) Total fixed costs increase, and operating income decreases.
Explanation
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Verified
So, as a result the fixed cost...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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