Question
Benjamin Company had the following results of operations for the past year: Sales (16,000 units at $9.80) $ 156,800 Direct materials and direct labor $
Benjamin Company had the following results of operations for the past year: Sales (16,000 units at $9.80) $ 156,800 Direct materials and direct labor $ 92,800 Overhead (20% variable) 12,800 Selling and administrative expenses (all fixed) 31,600 (137,200 ) Operating income $ 19,600 A foreign company (whose sales will not affect Benjamin's market) offers to buy 3,600 units at $7.06 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $560 and selling and administrative costs by $260. Assuming Benjamin has excess capacity and accepts the offer, its profits will:
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