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Markson Company had the following results of operations for the past year: Sales (8,000 units at $20.90) $ 167,200 Variable manufacturing costs $ 89,600 Fixed
Markson Company had the following results of operations for the past year:
Sales (8,000 units at $20.90) | $ | 167,200 | ||||||
Variable manufacturing costs | $ | 89,600 | ||||||
Fixed manufacturing costs | 15,900 | |||||||
Variable selling and administrative expenses | 15,600 | |||||||
Fixed selling and administrative expenses | 20,900 | (142,000 | ) | |||||
Operating income | $ | 25,200 | ||||||
A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $15.35 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,690 for the purchase of special tools. Marksons annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:
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Increase by $4,400.
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Decrease by $4,800.
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Decrease by $6,090.
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Increase by $2,710.
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Decrease by $1,690.
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