Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs: Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit? Per Unit Direct materials $30 Direct labor $20 Variable manufacturing overhead $15 Fixed manufacturing overhead $25 a. $50,000 decrease b. $30,000 increase c. $20,000 increase d. $30,000 decrease
Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs: Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit? Per Unit Direct materials $30 Direct labor $20 Variable manufacturing overhead $15 Fixed manufacturing overhead $25 a. $50,000 decrease b. $30,000 increase c. $20,000 increase d. $30,000 decrease
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 2CMA
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Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following
manufacturing costs: Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit?
Per Unit
Direct materials
$30
Direct labor
$20
Variable manufacturing overhead
$15
Fixed manufacturing overhead
$25
a. $50,000 decrease
b. $30,000 increase
c. $20,000 increase
d. $30,000 decrease
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