Question
2. Incremental costs are the additional costs incurred if a company pursues a certain course of action. True or False 15. Benjamin Company had the
2. Incremental costs are the additional costs incurred if a company pursues a certain course of action. True or False
15.
Benjamin Company had the following results of operations for the past year:
Sales (13,900 units at $18) | $ | 250,200 | |||||
Direct materials and direct labor | $ | 69,500 | |||||
Overhead (20% variable) | 13,900 | ||||||
Selling and administrative expenses (all fixed) | 20,850 | (104,250 | ) | ||||
Operating income | $ | 145,950 | |||||
A foreign company (whose sales will not affect Benjamins market) offers to buy 3,475 units at $14.40 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $930 and selling and administrative costs by $620. Assuming Benjamins productive capacity is 13,900 units per year and accepts the offer, its profits will:
Multiple Choice
Decrease by $12,510.
Decrease by $14,060.
Decrease by $ 133,440.
Increase by $ 10,960.
Increase by $ 4,095.
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