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AAA Lock Manufacturing Co. makes and sells several models of locks. The cost records for the ZForce lock show that manufacturing costs total $24 per lock. An analysis of this amount indicates that $13.92 of the total cost has a variable cost behavior pattern, and the remainder is an allocation of fixed manufacturing overhead. The normal selling price of this model is $31 per lock. A chain store has offered to buy 15,000 ZForce locks from AAA Lock at a price of $16.8 each to sell in a market that would not compete with AAA Lock's regular business. AAA Lock has manufacturing capacity available and could make these locks without incurring additional fixed manufacturing overhead.

Required:
(a)	Calculate the effect on AAA Lock's operating income of accepting the order from the chain store. (Omit the "$" sign in your response.)

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9948137

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