Black Tool Company has a production capacity is 1,500 units per month, but current production is only 1,250 units

ACCOUNTING

Multiple Choice

Black Tool Company has a production capacity is 1,500 units per month, but current production is only 1,250 units. The manufacturing costs are $60 per unit and marketing costs are $16 per unit. Doug Hall offers to purchase 250 units at $76 each for the next five months. Should Black accept the one-time-only special order if only absorption-costing data are available?

a. Yes, good customer relations are essential.

b. No, the company will only break even.

c. No, since only the employees will benefit.

d. Yes, since operating profits will most likely increase.


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