Yellco Inc ? the Company Has Received an Offer from an Exporter

question 62

Multiple Choice

Yellco Inc., a toy manufacturer, provided the following information: $$\begin{array} { l r } \text { Domestic unit sales price } & \$ 50 \\\text { Unit manufacturing costs: } & \\\text { Variable } & 10 \\\text { Fixed } & 8\end{array}$$ ? The company has received an offer from an exporter for 9,000 units of toys at $60 per unit.The additional business is not expected to affect the normal production or domestic sales prices of Yellco Inc.What is the amount of gain or loss from acceptance of the offer?

• A) $450,000 gain
• B) $162,000 loss
• C) $315,000 loss
• D) $162,000 gain

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Definitions:

Legal Distributions

Payments made by a company to its shareholders or owners as declared in its corporate charter or bylaws and approved by regulators.

Book Value

Represents the value of an asset according to its balance sheet account balance, taking into account the cost of the asset and any depreciation or amortization.

Preferred Stock

A type of stock that typically offers dividends and other privileges, like priority in asset liquidation, over common stock but usually doesn't carry voting rights.

Adjustable Rate

Interest rates that are variable and can change over the duration of a loan, typically in relation to an index or benchmark rate.