Question
Markson Company had the following results of operations for the past year: Sales (8,000 units at $20) $ 160,000 Variable manufacturing costs $ 86,000 Fixed
Markson Company had the following results of operations for the past year:
Sales (8,000 units at $20) $ 160,000 Variable manufacturing costs $ 86,000 Fixed manufacturing costs 15,000 Variable selling and administrative expenses 12,000 Fixed selling and administrative expenses 20,000 (133,000 ) Operating income $ 27,000
A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $14 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,600 for the purchase of special tools. Markson's annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:
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