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Benjamin Company had the following results of operations for the past year: Sales (20,000 units at $10.00) $ 200,000 Variable costs Direct materials 40,000 Direct
Benjamin Company had the following results of operations for the past year:
Sales (20,000 units at $10.00) | $ 200,000 |
---|---|
Variable costs | |
Direct materials | 40,000 |
Direct labor | 80,000 |
Overhead | 4,000 |
Contribution margin | 76,000 |
Fixed costs | |
Fixed overhead | 16,000 |
Fixed selling and administrative expenses | 40,000 |
Income | $ 20,000 |
A foreign company (whose sales will not affect Benjamins market) offers to buy 5,000 units at $7.50 per unit. In addition to variable costs, selling these units would increase fixed overhead by $750 and fixed selling and administrative costs by $375. Assuming Benjamin has excess capacity and accepts the offer, its profits will:
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