Question
Benjamin Company had the following results of operations for the past year: Sales (16,000 units at $10)$160,000Direct materials and direct labor$96,000Overhead (20% variable)16,000Selling and administrative
Benjamin Company had the following results of operations for the past year:
Sales (16,000 units at $10)$160,000Direct materials and direct labor$96,000Overhead (20% variable)16,000Selling and administrative expenses (all fixed)32,000(144,000)Operating income$16,000
A foreign company (whose sales will not affect Benjamin's market) offers to buy 4,000 units at $7.50 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $600 and selling and administrative costs by $300. If Benjamin accepts the offer, its profits will:
Increase by $30,000.
Increase by $6,000.
Decrease by $6,000.
Increase by $5,200.
Increase by $4,300.
Same kind of problem I just had just need to be sure I'm understanding and not making silly math mistakes
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started