The normal selling price of our product is $42 per unit. The costs of production are direct materials, $8; direct labor, $6; variable overhead, $7; and fixed overhead, $4 (based on normal capacity). The company has received a special order for 10,600 units at a unit sales price of $23 . There is ample unused capacity to fill the order and $1 per unit will be incurred for additional freight costs
If the order is accepted, operating income will
a. increase by $10,600.
b. decrease by $31,800.
c. increase by $21,200.
d. decrease by $21,200.
A
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