Benjamin Company Had the Following Results of Operations for the Past

question 57

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's productive capacity is 16,000 units per year and accepts the offer, its profits will:

• A) Decrease by $10,000.
• B) Decrease by $10,900.
• C) Decrease by $ 6,000.
• D) Increase by $ 9,100.
• E) Increase by $ 4,300.

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Definitions:

Genetic Predisposition

The inherited genetic makeup that increases the likelihood of developing certain traits, behaviors, or conditions.

Consideration Skills

The ability to think about and respect the feelings and needs of others before speaking or taking action.

Individual Employees

Workers regarded as separate entities, each with unique contributions and needs within a workplace.

Poor Performance

An individual's inability to meet the established standards or expectations in their work or responsibilities.