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    Compute change in operating if order is accepted

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    Texas Company produces and sells 22,000 units of a single product. Costs associated with this level of production are as follows:

    Direct materials $15

    Direct manufacturing labor 45

    Variable manufacturing overhead 25

    Fixed manufacturing overhead 40

    Total $124

    The product normally sells for $160 per unit. Texas Company has received a special order to sell 2,000 units at $120 per unit. Texas Company has excess production capacity.

    Required:

    Compute the amount by which the operating income of Texas Company would change if the order were accepted.

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    Texas Company produces and sells 22,000 units of a single product. Costs associated with this level of production are as follows:

    Direct materials $15

    Direct ...

    Solution Summary

    The expert computes change in operating if the order is accepted is determined.

    $2.19

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