It Costs Garner Company $12 of Variable and $5 of Fixed

question 80

Multiple Choice

It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income?

• A) $4,000 increase
• B) $4,000 decrease
• C) $6,000 decrease
• D) $30,000 increase

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Definitions:

Test Performance

An individual's performance or achievement on exams or assessments, measuring knowledge, ability, or skill in a particular area.

Yerkes-Dodson Law

A theory suggesting that there is an optimal level of arousal for the best performance of a task: too little or too much arousal can decrease performance.

Physiological Arousal

A physical state of heightened alertness and readiness to respond, involving changes such as increased heart rate, blood pressure, and sensory alertness.

Peak Performance

The state of delivering maximum productivity or achieving the highest level of performance in a given task.