Problem 9 Texas Company produces and sells 22,000 units of a single product. Cos

Question

Problem 9

Texas Company produces and sells 22,000 units of a single product. Costs associated with this level of production are as follows:

Direct materials $15 per unit
Direct manufacturing labor $45 per unit
Variable manufacturing overhead $25 per unit
Fixed manufacturing overhead $40 per unit

The product normally sells for $160 per unit. Texas Company has received a special order to sell 2,000 units at $120 per unit. Texas Company has excess production capacity.

Required:
Compute the amount by which the operating income of Texas Company would change if the special order was accepted.

Explanation / Answer

Fixed manufacturing overhead will nnot change change in operating income = $120*2,000 - (15+45+$25 )*2000 = $70,000

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.