The Following Information Relates to the Jasmine Company for the Upcoming

question 138

Multiple Choice

The following information relates to the Jasmine Company for the upcoming year, based on 400,000 units:
$\begin{array}{lrr}&\text { Amount}&\text { Per Unit}\\\text { Sales } & \$ 8,000,000 & \$ 20.00\\\text { Cost of goods sold } & \underline{6,400,000} & \underline{16.00 }\\\text { Gross margin } &1,600,000& 4.00 \\\text { Operating expenses } &\underline{ 600,000 }&\underline{ 1.50} \\\text { Operating profits } & \underline{ \$ 1,000,000} &\underline{ \$2.50}\end{array}$

The cost of goods sold includes $2,400,000 of fixed manufacturing overhead; the operating expenses include $200,000 of fixed marketing expenses. A special order offering to buy 50,000 units for $15.00 per unit has been made to Jasmine.
- Fortunately, there will be no additional operating expenses associated with the order and Jasmine has sufficient capacity to handle the order. How much will operating profits increase if Jasmine accepts the special order?

• A) $50,000
• B) $125,000
• C) $200,000
• D) $250,000

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Definitions:

Operational Flexibility

The ability of a business or organization to adapt to changes in conditions, demand, or environment while maintaining efficiency and effectiveness.

Production Batches

Groups or lots of goods produced together during a manufacturing process, often under the same conditions over a specific time period.

Economic Force

Factors or agents that cause significant changes or impacts on the economy, influencing markets, employment, and production.

Global Trade

The exchange of goods and services across international borders, influenced by global economic policies and agreements.