Surplus Tyre Company produces and sells 40,000 tyres per month. The normal sales price is...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Surplus Tyre Company produces and sells 40,000 tyres per month. The normal sales price is $30 per tyre. The costs to produce one tyre are $4 of direct materials, $3 of direct labor, $8 of variable overhead, and $2 of fixed overhead. A special order for 1,000 tyre at $15 each has been received. Assuming fixed overhead costs will not increase and present sales will not be affected, the profit increase or decrease from accepting this special order is:
Select one:
a. $0.
b. An $8,000 increase.
c. A $2,000 increase.
d. A $2,000 decrease.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
