Operating income would change if the order were accepted

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Reference no: EM131882860

Johnson 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 $8.00 per tie. The company will incur an additional variable selling cost of $1.50 per unit with the special order. The company has excess capacity.

Required:

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

Reference no: EM131882860

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