Twisty Pretzel Company produces bags of pretzels that are sold in cases and retailed throughout the United States. Its normal selling price is $30 per case; each case contains 15 bags of pretzels. The variable costs are $19 per case. Fixed costs are $25,000 for a normal production run of 5,000 cases per month. Twisty Pretzel received a special order from an existing customer which it could accommodate without exceeding capacity. The order was for 1,500 units at a special price of $20 per case; a variable selling cost of $1 per case included in the variable costs would not be relevant for this order. If the order is accepted, the impact on operating income would be a(n) ________.

Twisty pretzel company has received an order for 1500 units at a special price of $20 per case, so the revenue which twisty pretzel can make on this order is =

REVENUE = Number of units made x Selling price

= 1500 x $20

= $30,000

Now it is told to us that initial variable cost per case is $19 but here as per new order the variable selling cost of $1 included in the variable cost would now become excluded , so therefore the variable cost for this order would be $19 - $1 = $18 per case

COST = Number of units x Cost price

= 1500 x $18

= $27,000

so by subtracting the cost from revenue we get the increase in operating income,

=$30,000 - $27,000

= $3000

maffettbs0924 maffettbs0924 · Answer 2 · 2020-04-03T16:08:32+02:00

maffettbs0924 maffettbs0924

03-04-2020

Answer:it would become a question

Explanation:

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