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Thompson Company has the following operating results: Sales (16,000 units at $10 per unit) $160,000 Direct materials and labor (100% variable) $96,000 Overhead (20% variable)
Thompson Company has the following operating results:
Sales (16,000 units at $10 per unit) | $160,000 | |
Direct materials and labor (100% variable) | $96,000 | |
Overhead (20% variable) | 16,000 | |
Selling and administrative expenses (all fixed) | 32,000 | |
Total Expenses | 144,000 | |
Income | 16,000 |
Thompson has the capacity to produce 22,000 units. A foreign company offers to buy 4,000 units at $7.50 per unit. Other than an order-related $900 increase in fixed selling and administrative costs, selling these units would not increase Thompsons fixed costs.
If Thompson accepts the offer, its income will:
Group of answer choices
increase by $5,200
decrease by $6,000
increase by $6,000
decrease by $30,000
increase by $4,300
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