Southern Digital,Inc. The Southern Digital,Inc.produces a High-Quality Computer Chip.Unit Production Costs (Based

Southern Digital,Inc.
The Southern Digital,Inc.produces a high-quality computer chip.Unit production costs (based on capacity production of 100,000 units per year) follow:
Direct material                               $50
Directlabor                                      20
Overhead(20% variable)                 10
Other information:
Sales price                                      100
SG\&A costs(40% variable)             15

Refer to Southern Digital,Inc.Assume,for this question only,that the Memory Division is presently operating at a level of 80,000 chips per year.Accepting a "special order" on 2,000 chips at $88 will

A) increase total corporate profits by $4,000.
B) increase total corporate profits by $20,000.
C) decrease total corporate profits by $14,000.
D) decrease total corporate profits by $24,000.

Correct Answer:

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