Question

Benjamin Company had the following results of operations for the past year: Sales (16,000 units at $10.45) $167,200 Direct materials and direct labor $103,200 Overhead (20% variable) 23,200 Selling and administrative expenses (all fixed) 32,900 (159,300) Operating income $7,900 A foreign company (whose sales will not affect Benjamin's market) offers to buy 4,900 units at $8.49 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $690 and selling and administrative costs by $390. If Benjamin accepts the offer, its profits will: Decease by $9,996. Increase by $7,495. Increase by $41,601. Increase by $9,996. Increase by $8,575.

Lattimer Company had the following results of operations for the past year: Sales (15,000 units at $11.80) $177,000 Variable manufacturing costs $94,500 Fixed manufacturing costs 18,000 Selling and administrative expenses (all fixed) 33,000 (145,500) Operating income $31,500 A foreign company whose sales will not affect Lattimer's market offers to buy 4,600 units at $7.10 per unit. In addition to existing costs, selling these units would add a $0.21 selling cost for export fees. If Lattimer accepts this additional business, the special order will yield a: $3,680 profit. $2,714 profit. $7,406 loss. $1,840 loss. $2,806 loss.

Answer 1