Preston Company Manufactures a Product with a Unit Variable Cost

question 46

Multiple Choice

Preston Company manufactures a product with a unit variable cost of $140 and a unit sales price of $264. Fixed manufacturing costs were $720000 when 10000 units were produced and sold. The company has a one-time opportunity to sell an additional 3000 units at $210 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 $162000.
• B) Income would increase by $156000.
• C) Income would increase by $6000.
• D) Income would increase by $210000.

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Definitions:

Icosahedron

A geometric shape with 20 faces, each of which is an equilateral triangle.

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A shape that has many faces, typically referring to solids in geometry such as cubes or pyramids.

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Progressive Hypothesis

A theory proposing that change, especially in a societal or evolutionary context, occurs in a gradual, steady progression rather than through sudden leaps.