The Following Information Is Available for Diva Footwear's Segments Diva Footwear Normally Sells Boots for $90 Per Pair

question 48

Multiple Choice

The following information is available for Diva Footwear's segments: $\begin{array}{lrrr}&\text { Platform Shoes }&\text { Athletic Shoes }&\text { Boots }\\\hline\text { Sales } & \$ 120,000 & \$ 420,000 & \$ 360,000 \\\text { Variable costs } & 64,000 & 220,000 & 140,000\\\text { Contribution margin } & 56,000 & 200,000 & 220,000 \\\text { Direct fixed costs } & 45,000 & 70,000 & 90,000 \\\text { Allocated fixed costs } & 20,000 & 70,000 & 60,000 \\\text { Net income }&(\$9,000) &\$60,000&\$70,000\end{array}$ Diva Footwear normally sells boots for $90 per pair.An exporter has approached Diva about buying 1,000 pairs of boots for a one-time export deal for $81 per pair.Diva can avoid $3.00 per pair of the normal variable cost on this sale, but Diva must pay a fixed cost of $4,000 to have the boots shipped.Diva has the capacity to produce this order, and no regular sales will be affected.What affect will occur on Diva's profits if the order is accepted?

• A)Profits will increase by $42,000.
• B)Profits will increase by $49,000.
• C)Profits will increase by $45,000.
• D)More information is needed to answer.

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Definitions:

Independence

The state or condition of being self-sufficient and not relying on others for support or assistance.

Priority

The status established by importance or urgency that affects the order or time something will be addressed or done.

Typically Find

An expression used to indicate something that is commonly or generally encountered in particular situations or contexts.

Worsening Dementia

A decline in cognitive function beyond expected levels of normal aging, indicating an increase in the severity of dementia symptoms.