Kintectics Ltd Can Manufacture 480,000 Electrical Pumps a Year at a Variable

question 130

Multiple Choice

Kintectics Ltd can manufacture 480,000 electrical pumps a year at a variable cost of $15 per pump and fixed costs of $500,000. Kintectics Ltd budgeted that it can sell 400,000 at $25 each. An additional order of 100,000 was received, but at a discount of 35% from the regular price. If Kintectics Ltd accepts the special order, profit before taxes will:

• A) Decrease by $75,000
• B) Increase by $75,000
• C) Increase by $25,000
• D) Some other amount

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Definitions:

Individual Ownership

Pertains to the legal rights of a single individual to possess, use, and dispose of property or assets.

Taxed

Imposition of financial charges or other levies upon a taxpayer (an individual or legal entity) by a governmental organization in order to fund public expenditures.

Capitalist Economy

An economic system where trade, industry, and the means of production are largely or entirely controlled by private owners for profit.

Economic Infrastructure

The basic physical and organizational structures needed for the operation of a society or economy, like transportation, communication, and utilities.