TB MC Qu. 23-71 (Algo) Benjamin Company had the following results...

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

Sales (20,800 units at $10.00)	$ 208,000
Variable costs
Direct materials	41,600
Direct labor	83,200
Overhead	4,160
Contribution margin	79,040
Fixed costs
Fixed overhead	16,640
Fixed selling and administrative expenses	41,600
Income	$ 20,800

A foreign company (whose sales will not affect Benjamins market) offers to buy 5,200 units at $7.50 per unit. In addition to variable costs, selling these units would increase fixed overhead by $780 and fixed selling and administrative costs by $390. Assuming Benjamin has excess capacity and accepts the offer, its profits will:

Multiple Choice

• Increase by $39,000.

• Increase by $7,800.

• Decrease by $7,800.

• Increase by $6,760.

• Increase by $5,590.