Question
Markson Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual Total Sales (10,600 ). $20.00 $212.000
Markson Company had the following results of operations for the past year:
Contribution margin income statement Per Unit Annual Total
Sales (10,600 ). $20.00 $212.000
Variable costs
Direct Materials 4.25 45,050
Direct Labor 6.00 63,600
Overhead 2.00 21,200
Contribution Margin 7.75 82,150
Fixed Costs
Fixed Overhead 4.25 45,050
Income $3.50 $37,100
A foreign company offers to buy 3,000 units at $14 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $2,640 for the purchase of special tools. Madisons annual productive capacity is 15,900 units. If Markson accepts this additional business, its profits will:
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