Gandolph Company manufactures a product with the following costs per unit at the expected production of 30,000 units: The company has the capacity to produce 40,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 a unit for 2,000 units.
If the firm is at capacity and the special order is accepted, the effect on operating income would be
A) $-0-.
B) a $4,000 increase.
C) a $16,000 decrease.
D) a $20,000 increase.

Question

Gandolph Company manufactures a product with the following costs per unit at the expected production of 30,000 units:  The company has the capacity to produce 40,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 a unit for 2,000 units.
If the firm is at capacity and the special order is accepted, the effect on operating income would be
A) $-0-. 
B) a $4,000 increase. 
C) a $16,000 decrease. 
D) a $20,000 increase.

Quizplus · Accepted Answer

The Answer of Gandolph Company manufactures a product with the following costs per unit at the expected production of 30,000 units:  The company has the capacity to produce 40,000 units. The product regularly sells for $40. A wholesaler has offered to pay $32 a unit for 2,000 units.
If the firm is at capacity and the special order is accepted, the effect on operating income would be
A) $-0-. 
B) a $4,000 increase. 
C) a $16,000 decrease. 
D) a $20,000 increase.

Gandolph Company Manufactures a Product with the Following Costs Per