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Markson Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual Total Sales (8,600 units) $ 20.00

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

Contribution margin income statement

Per Unit

Annual Total

Sales (8,600 units)

$ 20.00

$ 172,000

Variable costs

Direct materials

4.25

36,550

Direct labor

6.00

51,600

Overhead

2.00

17,200

Contribution margin

7.75

66,650

Fixed costs

Fixed overhead

4.25

36,550

Income

$ 3.50

$ 30,100

A foreign company offers to buy 2,300 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $1,840 for the purchase of special tools. Marksons annual production capacity is 12,900 units. If Markson accepts this additional business, its profits will: A) Increase by $4,025. B) Decrease by $6,700. C) Decrease by $1,840. D) Increase by $2,185. E) Decrease by $5,865.

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