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Black Horse Corporation manufactures a product with the following full unit costs at a volume...

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Accounting

Black Horse Corporation manufactures a product with the following full unit costs at a volume of 2000 units:

Direct Materials $100

Direct Labor $40

Manufacturing Overhead (30% variable) $75

Selling expenses (50% variable) $25

Administrative expenses (10% variable) $40

Total Per unit $280

A company recently approached Black Horses management with an offer to purchase 225 units for $275 each. Black horse currently sells the product to dealers for $400 each. Black horses capacity is sufficient to produce the extra 225 units. No selling expenses would be incurred on the special order.

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If Black Horse's management accepts the offer, profits will: Select one: A. Increase by $33,40. B. Decrease by $24,412.50 C. Decrease by $60,000 D. Increase by $24,412.50 Check

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