Blue Technologies Manufactures and Sells DVD Players

Blue Technologies manufactures and sells DVD players. Great Products Company has offered Blue Technologies $22 per DVD player for 10,000 DVD players. Blue Technologies' normal selling price is $30 per DVD player. The total manufacturing cost per DVD player is $12 and consists of variable costs of $14 per DVD player and fixed overhead costs of $4 per DVD player. (NOTE: Assume excess capacity and no effect on regular sales.) How much are the expected increase (decrease) in revenues and expenses from the special sales order?

A) Expected increase in revenues $220,000; expected increase in expenses $140,000
B) Expected increase in revenues $220,000; expected increase in expenses $40,000
C) Expected increase in revenues $300,000; expected increase in expenses $140,000
D) Expected increase in revenues $220,000; expected increase in expenses $120,000

Correct Answer:

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