Beatbox Company Reported the Following Results from the Sale of 24,250

question 36

Multiple Choice

Beatbox Company reported the following results from the sale of 24,250 units of Product 123: $\begin{array} { l r } \text { Sales } & \$ 608,000 \\\text { Variable manufacturing costs } & 388,000 \\\text { Fixed manufacturing costs } & 120,000 \\\text { Variable selling costs } & 60,000 \\\text { Fixed administrative costs } & 30,000\end{array}$ Bongo Inc. has offered to purchase 2,000 of Product 123 at $20 each. Beatbox has available capacity, and the president is in favor of accepting the order. She feels it would be profitable because no variable selling costs will be incurred. The plant manager is opposed because the "full cost" of production is $20.95. Which of the following correctly notes the change in income if the special order is accepted?

• A)$8,000 decrease.
• B)$8,000 increase.
• C)$32,000 decrease.
• D)$40,000 decrease.
• E)$40,000 increase.

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Definitions:

Linear Model

A mathematical model that assumes a linear relationship between the independent and dependent variables.

Sales

The exchange of goods or services for money, constituting a primary activity for commercial businesses.

Scatter Diagram

A type of graph used in statistics to display values for two variables for a set of data, showing the relationship between the variables.

Linear Model

A statistical model assuming a linear relationship between the input variables (predictors) and a single output variable.