It Costs Lannon Fields $28 of Variable Costs and $12

question 101

Multiple Choice

It costs Lannon Fields $28 of variable costs and $12 of allocated fixed costs to produce an industrial trash can that sells for $60. A buyer in Mexico offers to purchase 3,000 units at $36 each. Lannon Fields has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?

• A) Decrease $12,000
• B) Increase $12,000
• C) Increase $108,000
• D) Increase $24,000

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Definitions:

Natural Environment

The physical, chemical, and biological systems and conditions that exist in the outer layer of Earth, excluding human creations.

Crops

Cultivated plants or agricultural produce, such as grain, vegetables, or fruit, grown and harvested extensively for profit or subsistence.

Great League Of Peace

An alliance of the Iroquois tribes, originally formed sometime between 1450 and 1600, that used their combined strength to pressure Europeans to work with them in the fur trade and to wage war across what is today eastern North America.

Iroquois

A historically powerful and influential group of Native American tribes in the northeastern United States, known for their sophisticated political system and the Iroquois Confederacy.