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.