Benjamin Company Had the Following Results of Operations for the Past

question 131

Multiple Choice

Benjamin Company had the following results of operations for the past year: A foreign company (whose sales will not affect Benjamin's market) offers to buy 4,000 units at $7.50 per unit.In addition to variable manufacturing costs,selling these units would increase fixed overhead by $600 and selling and administrative costs by $300.If Benjamin accepts the offer,its profits will:

• A)Increase by $30,000.
• B)Increase by $6,000.
• C)Decrease by $6,000.
• D)Increase by $5,200.
• E)Increase by $4,300.

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Definitions:

Preexisting Duty Rule

A legal principle stating that an existing obligation in a contract cannot serve as consideration for a new contract or for modifying the existing contract.

Unforeseen Circumstances

Events or situations that could not have been predicted or expected and may affect the ability to fulfill obligations.

Liquidated Debt

A debt with a known, fixed amount that is not disputed by either party.

Unliquidated Debt

A debt for which the exact monetary value has not been determined.