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A company is offered a one-time special order for its product and has the capacity to take this order without losing current business. Variable costs per unit and fixed costs in total will be the same. The gross profit for the special order will be 10%, which is 15% less than the usual gross profit. What impact will this order have on total fixed costs and operating income?

Respuesta :

Answer: Please refer to the explanation section

Explanation:

Effects on Fixed costs

fixed costs remain constant regardless of whether the level of output increases or decreases even if the company produces zero output fixed cost will remain the same. if the  company takes the one time order without stopping regular Production (current business) fixed costs will remain constant. one time order will only reduce fixed costs per unit.

Operating income.

Operating income will increase provided percentage increase in operating expense is less than 10%.  Gross profit on one time order is 10% , for operating income to increase the percentage increase in operating expenses as a result of taking the one time special order must  less than 10%

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