Reference no: EM132501275

Sycamore Shops has a capacity of 50,000 units and is currently producing and selling 45,000 at $50 a unit. The present cost structure, on a per unit basis, is:

Direct material                      $20

Direct labour                          10

Variable overhead                      6

Fixed overhead                            8

Question 1: An order for 7,000 units has been received from a Japanese company at a price of $45 per unit. The order size cannot be reduced. If the order is accepted, profit will:

A. Not change

B. Increase by $35,000

C. Decrease by $35,000

D. Increase by $63,000