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Markson Company had the following results of operations for the past year: Sales (8,000 units at $20.30) $ 162,400 Variable manufacturing costs $ 87,200 Fixed

Markson Company had the following results of operations for the past year:

Sales (8,000 units at $20.30) $ 162,400
Variable manufacturing costs $ 87,200
Fixed manufacturing costs 15,300
Variable selling and administrative expenses 13,200
Fixed selling and administrative expenses 20,300 (136,000 )
Operating income $ 26,400

A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $14.45 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,630 for the purchase of special tools. Marksons annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:

Multiple Choice

  • Decrease by $1,630.

  • Decrease by $5,100.

  • Increase by $2,170.

  • Increase by $3,800.

  • Decrease by $5,430.

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