Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 16,500 units of one of its most popular products. Grant currently manufactures 33,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $11 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials Direct labor 33,000 49,500 $132,000 $ 198,000 165,000 247,500 Factory overhead 132,000 148,500 Total manufacturing costs $429,000 Unit cost $13 $ 594,000 $12 Required: What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? Decrease of $12,560 Decrease of 22,400 Increase of $17,200 Increase of $16,500 None of the above

Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 16,500 units of one of its most popular products. Grant currently manufactures 33,000 units of this product in its Loveland, Ohio, plant. The plant is operating at 50% capacity. There will be no marketing costs on the special order. The sales manager of Grant wants to set the bid at $11 because she is sure that Grant will get the business at that price. Others on the executive committee of the firm object, saying that Grant would lose money on the special order at that price. Units Manufacturing costs: Direct materials Direct labor 33,000 49,500 $132,000 $ 198,000 165,000 247,500 Factory overhead 132,000 148,500 Total manufacturing costs $429,000 Unit cost $13 $ 594,000 $12 Required: What would be the impact on short-term operating income if the order is accepted at the price recommended by the sales manager? Decrease of $12,560 Decrease of 22,400 Increase of $17,200 Increase of $16,500 None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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