Determine the effect on aaa locks operating income


AAA Lock Manufacturing Co. makes and sells several models of locks. The cost records for the ZForce lock show that manufacturing costs total $24 per lock. An analysis of this amount indicates that $13.92 of the total cost has a variable cost behavior pattern, and the remainder is an allocation of fixed manufacturing overhead. The normal selling price of this model is $31 per lock. A chain store has offered to buy 15,000 ZForce locks from AAA Lock at a price of $16.8 each to sell in a market that would not compete with AAA Lock's regular business. AAA Lock has manufacturing capacity available and could make these locks without incurring additional fixed manufacturing overhead.

Required:
(a)

Calculate the effect on AAA Lock's operating income of accepting the order from the chain store. (Omit the "$" sign in your response.)

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Determine the effect on aaa locks operating income
Reference No:- TGS0675512

Expected delivery within 24 Hours