Question

53. Blue Technologies manufactures and sells DVD players. Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players. Blue Technologies' normal selling price is $33 per DVD player. The total manufacturing cost per DVD player is $14 and consists of variable costs of $10 per DVD player and fixed overhead costs of $5 per DVD player. (NOTE: Assume excess capacity and no effect on regular sales.)

Should Blue Technologies accept or reject the special sales order?

A) Accept, because operating income would increase $360,000.

B) Reject, because operating income would decrease $80,000.

C) Accept, because operating income would increase $80,000.

D) Reject, because operating income would decrease $160,000.

Answer 1

Accept, because operating income would increase $120,000

Step-by-step explanation:

The computation of given situation is shown below:-

Sales = $22 × 10,000

= $220,000

Variable cost = $10 × 10,000

= $100,000

= Sales - Variable cost

= $220,000 - $100,000

Increase in operating income = $120,000

Therefore, the correct answer is Increase in operating income $120,000. So, the option is not available in the question.