Baden Company Manufactures a Product with a Unit Variable Cost

question 29

Multiple Choice

Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

• A) Income would decrease by $8,000.
• B) Income would increase by $8,000.
• C) Income would increase by $140,000.
• D) Income would increase by $40,000.

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Definitions:

Fluid Restriction

A medical directive to limit fluid intake to manage or prevent health conditions, such as heart or kidney problems.

Spiritual Distress

A condition of distress linked to the diminished capacity to find and assimilate significance and direction in life through bonds with oneself, other people, the arts, literature, the natural world, or a higher power.

Social Isolation

A state of minimal or no contact with society or other individuals, which can lead to feelings of loneliness and have negative effects on health.

Risk for Suicide

The likelihood or potential for a person to attempt or complete suicide, often influenced by various mental, emotional, socioeconomic, and biological factors.