1. Black Cat Corporation manufactures a product with the following full unit costs at a volume of 4,000 units:

   Direct materials	$200
   Direct labor	80
   Manufacturing overhead (30% variable)	150
   Selling expenses (50% variable)	50
   Administrative expenses (10% variable)	80
   Total per unit	$560

   A company recently approached Black Cat's management with an offer to purchase 450 units for $550 each. Black Cat currently sells the product to dealers for $800 each. Black Cat's capacity is sufficient to produce the extra 450 units. No selling expenses would be incurred on the special order. If Black Cat's management accepts the offer, profits will:

   Decrease by $120,000

   Increase by $66,800

   Increase by $97,650

   Decrease by $24,000

1 points

QUESTION 24

1. Georgia Manufacturing Company produces products A, B, C, and D through a joint process. The joint costs amount to $250,000.

   Product	UnitsProduced	Sales Value at Split-Off	Additional Costs of Processing	Sales ValueAfter Processing
   A	1,500	$20,000	$5,000	$30,000
   B	2,500	$60,000	$6,000	$70,000
   C	2,000	$40,000	$8,000	$50,000
   D	3,000	$80,000	$12,000	$90,000

   If A is processed further, profits of A will:

   Decrease by $45,000

   Increase by $10,000

   Increase by $25,000

   Increase by $5,000