Benjamin Company Had the Following Results of Operations for the Past

question 78

Multiple Choice

Benjamin Company had the following results of operations for the past year: $$\begin{array} { | l | r | r | } \hline \text { Sales } ( 16,000 \text { units at } \$ 10 ) & & \$ 160,000 \\\hline \text { Direct materials and direct labor } & \$ 96,000 & \\\hline \text { Overhead ( } 20 \% \text { variable) } & 16,000 & \\\hline \text { Selling and administrative expenses (all fixed) } & \underline { 32,000 } & \underline { ( 144,000 ) } \\\hline \text { Operating income } & & \underline { \$ 16,000 }\\\hline\end{array}$$ 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. Assuming Benjamin has excess capacity and 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:

Diurnal

Describing organisms active during the day and resting at night; also pertains to daily cycles of light and darkness.

Biological Clocks

Biological clocks are internal mechanisms in organisms that regulate cycles of activity and rest, including sleep-wake cycles and hormonal changes, in accordance with environmental changes.

Environmental Cues

Signals from the environment that can affect the behavior and physiology of organisms.

Biological Rhythms

Innate, cyclical patterns in biological processes and behaviors observed in living organisms, including circadian rhythms and seasonal cycles.