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Stangle Company manufactures ties. When 28,000 ties are produced, the costs per unit are:

Direct materials $0.60
Direct manufacturing labor 3.00
Variable manufacturing overhead 1.20
Fixed manufacturing overhead 1.60
Variable selling 0.80
Fixed selling 1.13

The ties normally sell for $22 each. The company has received a special order for 2,000 ties at $10.00 per tie. The company has excess capacity.

Required:

Compute the amount by which the operating income would change if the order were accepted.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M943227

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