Baden Company Manufactures a Product with a Unit Variable Cost

question 189

Multiple Choice

Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

• A) Income would decrease by $4,000.
• B) Income would increase by $4,000.
• C) Income would increase by $70,000.
• D) Income would increase by $20,000.

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Definitions:

Alveoli

Tiny air sacs in the lungs where gas exchange takes place, oxygen enters the blood, and carbon dioxide is removed.

Bicarbonate Ions

The bicarbonate ion (HCO3-) plays a crucial role in maintaining the body's pH balance, particularly in the buffering of blood plasma.

Carbaminohemoglobin

Hemoglobin carrying carbon dioxide.

Carbon Dioxide

A colorless, odorless gas produced through cellular respiration and combustion, utilized by plants in photosynthesis to produce oxygen.