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TOR Ltd is a manufacturer of jackets. The standard cost per jacket is: Labour cost:...

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Accounting

TOR Ltd is a manufacturer of jackets. The standard cost per jacket is: Labour cost: 8 hours & 10/hour Time left 2:27:12 Raw materials: 40/jacket The company produces and sells 10,000 jackets per year at a selling price of 200/jacket. Fixed overheads for the year amount to 500,000. A new order for 2000 jackets was received from a new potential customer, at an offered price of 160/jacket. If this new order is accepted, the company may utilize idle labour for up to 50% of the hours needed to complete the new order. For the remaining labour hours needed, the company will have to pay the normal rate. Regarding raw materials, 50% will be bought at the standard price and the rest will be obtained from a company in the same sector that has declared bankruptcy. The raw materials from the bankrupted supplier will be bought at 25% of the normal price and cannot be used in any other areas of production. Fixed overheads are not expected to change from their current levels. The increase in the total operating profit of the company, if the new order is accepted is: a. 212,500 O b. None of the others O c. 130,000 O d. 190,000 e. 205,000

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