Reference no: EM132717855

Problem - Johnson Company manufactures a variety of shoes and has received a special one-time-only order directly from a wholesaler. Johnson has sufficient idle capacity to accept the special order to manufacture 15,000 pairs of sneakers at a price of $7.50 per pair. Johnson's normal selling price is $11.50 per pair of sneakers. Variable manufacturing costs are $5.00 per pair and fixed manufacturing costs are $3.00 per pair. Johnson's variable selling expense for its normal line of sneakers is $1.00 per pair. What would be the effect on Johnson's operating income if the company accepted the special order?

a. Decrease by $60,000

b. Increase by $22,500

c. Increase by $37,500

d. Increase by $52,500