Question - Samson Incorporated provided the following information regarding its only product:
Sales price per unit: $50.00
Direct materials used: $160.00
Direct labor incurred: $185,000
Variable manufacturing overhead: $120,000
Variable selling and administrative expenses: $70,000
Fixed manufacturing overhead: $65,000
Fixed selling and administrative expenses $12,000
Units produced and sold: 20,000
Assume no beginning inventory
Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 1,200 units at a sale price of $47 per product? The 1,200 units would not require any variable selling and administrative expenses. (NOTE: Assume regular sales are not affected by the special order.)
A) Increase by $24,300
B) Decrease by $28,500
C) Increase by $28,500
D) Increase by $84,300