Minnesota Inc Assuming There Is Excess Capacity, the Effect of Accepting a

question 26

Multiple Choice

Minnesota Inc.provided the following information regarding its only product--scissors: $\begin{array}{lr}\text { Fixed manufacturing costs } & \$ 425,000 \\\text { Fixed selling and administrative costs } & 85,000 \\\text { Fixed manufacturing costs } & 72,000 \\\text { Fixed selling and administrative costs } & 80,000 \\\text { Variable manufacturing costs } & 1,030,000 \\\text { Variable selling and administrative costs } & 120,000 \\\text { Selling unit price } & 125 \\& \\\text { Units produced and sold } & 23,000\end{array}$ Assuming there is excess capacity, the effect of accepting a special order for 1,000 units at a price of $80.00 per scissors will be _____.

• A)net income would increase by $1,000
• B)net income would increase by $22,500
• C)net income would decrease by $80,000
• D)net income would decrease by $200,000

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Definitions:

Color Sensitive Cones

Photoreceptor cells in the retina of the eye that are responsible for color vision under bright light conditions.

Retina

The light-sensitive layer of tissue at the back of the inner eye, which converts light images into electrical signals sent to the brain.

Saturation

The purity of a color, or the degree to which the light waves producing it are of the same wavelength.

Color Purity

The intensity and vividness of a color, without any dilution or mixture with other colors, indicating the color's saturation level.