A) Benjamin Company had the following results of operations for the past year:

Sales (16,500 units at $16)				$	264,000
Direct materials and direct labor	$	165,000
Overhead (20% variable)		16,500
Selling and administrative expenses (all fixed)		28,050			(209,550	)
Operating income				$	54,450

A foreign company (whose sales will not affect Benjamins market) offers to buy 4,125 units at $10.40 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $640 and selling and administrative costs by $580. Assuming Benjamins productive capacity is 16,500 units per year and accepts the offer, its profits will:

• Decrease by $23,100.

• Decrease by $24,320.

• Decrease by $ 31,350.

• Increase by $ 21,880.

• Increase by $ 4,705.

B) If the internal rate of return (IRR) of an investment is lower than the hurdle rate, the project should be rejected.

True / False