Identify the operating income, if Company J accepts the special order.

Question

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?

Answer 1

Question

Chapter 25, Problem 2CMA

To determine

Identify the operating income, if Company J accepts the special order.

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