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:

Anticline

An anticline is a geological fold with layers that curve upward, typically associated with areas of tectonic compression.

Folding

The bending of the Earth's crust which can create mountains and valleys as a result of tectonic forces.

Compression

In geology, compression refers to the force or stress that pushes materials together, leading to folding, faulting, or shortening in the Earth's crust.

Tension

The force applied on a material that stretches it apart, often leading to geological features such as rift valleys or the expansion of ocean basins at divergent boundaries.