Goody Buy Electronics Has Received an Offer from a Customer

question 35

Multiple Choice

Goody Buy Electronics has received an offer from a customer for $21,600 to purchase 12,000 external hard drives.Good Buy has budgeted sales of 200,000 hard drives totaling $500,000, with fixed costs of $260,000 and total costs of $420,000.Assuming that Good Buy has the capacity to produce the additional units and that accepting this order will not affect any other orders, what effect will accepting the order have on Good Buy's profit?

• A)Incremental profit will increase by $21,600
• B)Incremental profit will decrease by $9,600
• C)Incremental profit will increase by $12,000
• D)Incremental profit will decrease by $3,600

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Definitions:

Liquidity

The ease with which an asset or security can be converted into cash without significantly affecting its market price.

Limited Liability Partnerships

A business structure that allows partners to have limited liabilities, which means they are not personally liable for the debts of the business.

Portfolio Composition

The breakdown of assets within an investment portfolio, classified by type, sector, risk, or other criteria.

Temporary Misalignments

Short-term discrepancies between the prices or values of related financial instruments or market sectors that are expected to correct over time.