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Jade Ltd. manufactures a product, which regularly sells for $71. This product has the following costs...

Jade Ltd. manufactures a product, which regularly sells for $71. This product has the following costs per unit at the expected production of 47360 units: Direct labour $19 Direct materials 9 Manufacturing overhead (43% is variable) 24 The company has the capacity to produce 53089 units. A wholesaler has offered to pay $56 for 11164 units. If Jade Ltd. accepts this special order, operating income would increase (decrease) by: Select one: a. $19764 b. $-58609 c. $197380 d. $44656

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Answer #1
Prpduction Level
Without Special Order With Special Order Incremental analysis
47360 Units 58524 Units
Sales
Regular sells @ $71 3362560 3362560
Special order @ $56 625184 625184
Costs
Direct Materials 426240 526716 100476
Direct Labour 899840 1111956 212116
Variable Manufacturing Overhead 488755 603968 115212
Fixed Manufacturing Overhead 647885 647885 0
Operating Income 899840 1097220 197380

Option C is the correct answer. Operating income is 197380

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