Samson Designers Produces a Lady's Handbag That Normally Sells for $120.The

question 115

Multiple Choice

Samson Designers produces a lady's handbag that normally sells for $120.The company produces 800 units annually but has the capacity to produce 1,100 units.An order from a customer has been received for 200 handbags at $85 each that would not disrupt current operations.Current costs for the handbag are as follows: $$\begin{array} { l r } \text { Direct materials } & \$ 23.00 \\\text { Direct labor } & 45.00 \\\text { Variable overhead } & 7.00 \\\text { Fixed overhead } & 12.00 \\\text { Total } & \$ 87.00\end{array}$$ In addition, the customer would like to add a monogram to each bag which would require an additional $4 per bag in additional labor costs.Samson would also have to purchase a piece of equipment to create the monogram which would cost $800.This equipment would not have any other uses.Which statement is true with regard to this situation?

• A)Incremental revenues will exceed incremental costs by $400.
• B)Incremental revenues will exceed incremental costs by $1,200.
• C)Incremental costs will exceed incremental revenues by $1,200.
• D)Incremental costs will exceed incremental revenues by $2,000.

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Definitions:

Sense of Smell

A sensory function provided by the olfactory system, allowing individuals to perceive and differentiate odors.

Glial Cells

Supportive cells in the nervous system that play key roles in maintaining homeostasis, forming myelin, and providing support and protection for neurons.

Somatic Nervous System

Part of the peripheral nervous system responsible for voluntary control of body movements through the action of skeletal muscles.

Neurotransmitters

Neurotransmitters are chemicals in the brain that transmit signals from one neuron to another, playing key roles in various physiological and psychological functions.