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Unformatted text preview: net operating
income will increase by $6,000. This suggests that Jet
should accept the order.
Increase in revenue (3,000 × $10)
I ncrease in costs (3,000 × $8 variable cost)
I ncrease in net operating income 12-26 $ 30,000
$ 6,000 Note: This answer assumes that the fixed costs are
unavoidable and that variable marketing costs must be
incurred on the special order. A special order is a one-time
order that is not considered
part of the company’s normal
ongoing business. When analyzing a special
order, only the incremental
costs and benefits are
relevant. 12-27 Key Terms and Concepts
When a limited resource
of some type restricts
the company’s ability to
satisfy demand, the
company is said to have
a constraint. The machine or process
that is limiting overall
output is called the
bottleneck – it is the
constraint. 12-28 Utilization of a Constrained Resource
When a constraint exists, a company should
select a product mix that maximizes the total
contribution margin earned since fixed costs
usually remain unchanged.
A company sho...
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- Winter '10