Figure 9-5
Reggie Ltd Recently, a Company Approached Reggie Ltd

Multiple Choice

Figure 9-5
Reggie Ltd. manufactures a single product with the following unit costs for 1,000 units: $\begin{array}{lr}\text { Direct materials } & £ 2,400 \\\text { Direct labour } & 960 \\\text { Factory overhead (30\% variable) } & 1,800 \\\text { Selling expenses ( } 50 \% \text { variable) } & 900 \\\text { Administrative expenses (10\% variable) } & 840 \\\text { Total per unit } & £ 6,900\end{array}$ Recently, a company approached Reggie Ltd. about buying 100 units for £5,100 each. Currently, the models are sold to dealers for £7,800. Reggie Ltd.'s capacity is sufficient to produce the extra 100 units. No additional selling expenses would be incurred on the special order.
-Refer to Figure 9-5. How much will income change if the special order is accepted?

A) increase by £398,400
B) decrease by £180,000
C) increase by £111,600
D) no change