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Minnies Soup plant is running at 52% of its monthly capacity. Minnies Soup plant has...

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Accounting

Minnies Soup plant is running at 52% of its monthly capacity. Minnies Soup plant has just received a special order to produce 360 cases of creamy potato soup for a statewide supermarket. The supermarket will sell the soup under its own private brand label. The soup will be the same in all respects, except for the label, which will cost Minnies Soup plant an extra $450 in total to design. The supermarket has offered to pay only $19.00 per case, which is well under Minnies normal sales price.
Costs at the current production level (405 cases) are as follows:
Manufacturing Costs Total Cost Cost per case
Direct Materials $4,050 $10.00
Direct Labor 1,2153.00
Variable MOH 8102.00
Fixed MOH 2,4306.00
Total $8,505 $21.00
If Minnies Soup plant accepts the offer, profits will:
Select one:
a.
Increase by 1,440
b.
Increase by $990
c.
Decrease by 1,440
d.
Decrease by $990

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