Figure 17-2 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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Refer to Figure 17-2.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

Figure 17-2 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.
-
Refer to Figure 17-2.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 special order would generate additional revenue of $450,000 (4,500 units x $100). Assuming the cost to produce these units is less than $450,000, the income would increase by the difference. The problem suggests a $153,000 increase, indicating costs are $297,000, leading to a net income increase of $153,000.

Figure 17-2 Walton Company Manufactures a Product with the Following