Multiple Choice
The Nightingale Corp. makes and sells 200,000 chairs each year. The total fixed costs are $10,000,000. Its variable costs are: labor of $60 per chair; direct materials of $200 per chair; and variable overhead of $40 per chair. It normally sells its chairs at $500 per chair. Assuming that it does not have a capacity problem, what would be the effect on its profits if it accepted a special order to make an additional 100,000 chairs for $310 each?
A) Profits would decrease by $4,000,000
B) Profits would be unaffected
C) Profits would increase by $1,000,000
D) Profits would increase by $4,000,000
Correct Answer:
Verified
Correct Answer:
Verified
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