Question about operating income?
Goods Company produces and sells 22,000 units of a single product. Costs associated with this level are as follows:
Direct materials: $15
Direct manufacturing labor: $45
Variable manufacturing overhead: $25
Fixed manufacturing overhead: $30
The products sells for $145 per unit. Good company has received a special order to sell 2,000 units at $100 per unit. Good company has excess production capacity.
Compute the amount by which the operating income of Good company would change if the order were excepted. Also should Goods company accept this special order. Why or why not.
