Lattimer Company Had the Following Results of Operations for the Past

question 92

Multiple Choice

Lattimer Company had the following results of operations for the past year: $$\begin{array} { | l | r | r | } \hline \text { Sales } ( 15,000 \text { units at } \$ 12 ) & & \$ 180,000 \\\hline \text { Variable manufacturing costs } & \$ 97,500 & \\\hline \text { Fixed manufacturing costs } & 21,000 & \\\hline \text { Selling and administrative expenses (all fixed) } & \underline { 36,000 } & \underline { ( 154,500 ) }\\\hline \text { Operating income } & & \underline { \$ 25,500} \\\hline\end{array}$$ A foreign company whose sales will not affect Lattimer's market offers to buy 5,000 units at $7.50 per unit. In addition to existing costs, selling these units would add a $0.25 selling cost for export fees. Lattimer's annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a:

• A) $2,000 loss.
• B) $8,250 loss.
• C) $3,750 profit.
• D) $3,250 loss.
• E) $5,000 profit.

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Definitions:

Trace Element

An element required by an organism in very small amounts.

Iron

A metallic element essential for human life; involved in oxygen transport within the bloodstream.

Obesity

Excess accumulation of body fat; a person is considered obese if the body mass index (BMI) is 30 or higher.

Fat Cells

Cells known as adipocytes, which are specialized in storing energy in the form of fat and play a key role in metabolism, body temperature regulation, and cushioning of organs.