Do the Hustle​ Company, a manufacturer of bell bottom​ jeans, has the capacity to produce​ 15,000 pairs of jeans each month. Current production and sales are​ 10,000 pairs per month at a selling price of​ $15 each. Based on this level of​ activity, the following unit costs are​ incurred: Direct Materials ​$5.00 Direct Labor    ​ $3.00 Variable MOH ​$0.75 Fixed MOH ​$1.50 Hustle has received a special order from a customer who wants to pay a reduced price of​ $10 per pair of jeans for an order of​ 6,000 pairs of jeans. If the special order is​ accepted, what will be the change in operating​ income? A. increase of​ $1,250 B. decrease of​$30,000 C. increase of​ $5,000 D. increase of​ $7,500 E. decrease of​ $6,250

Respuesta :

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Direct Materials ​$5.00

Direct Labor ​ $3.00

Variable MOH ​$0.75

Fixed MOH ​$1.50

Hustle has received a special order from a customer who wants to pay a reduced price of​ $10 per pair of jeans for an order of​ 6,000 pairs of jeans.

Because it is a special offer, we will no have into account the fixed costs.

Increase in income= [10 - (5+3+0.75)]*6000= 7500