Reference no: EM133144455

Question - Colortrigon Company makes a variety of paper products. One product is 30-pound copier paper, packaged 3,000 sheets in a box. One box normally sells for $20. A large bank offered to purchase 6,000 boxes at $15 per box. Costs per box are as follows:

Direct materials $6

Direct labor 2

Variable overhead 2

Fixed overhead 3

No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable.

Should Colotrigon accept the order?

a. Yes, income will increase by $19,000.

b. No, income will decrease by $86,000.

c. No, income will decrease by $43,000.

d. Yes, income will increase by $30,000.

e. It doesn't matter; there will be no impact on income.