Reality Planet Ltd

Multiple Choice

Reality Planet Ltd. sells product a model star at a price of $48 a unit. The per-unit cost data are: direct materials $15, direct labour $10, and overhead $12 (50% fixed and 50% variable) . Reality Planet has sufficient capacity to accept a special order for 40,000 units just received. Selling costs associated with this order would be $3 per unit. At a selling price of $36 per unit, the operating profit will:

A) Increase by $144,000
B) Increase by $80,000
C) Increase by $120,000
D) Increase by $200,000