Piersall Company Makes a Variety of Paper Products

question 142

Multiple Choice

Piersall Company makes a variety of paper products. One product is 20 lb copier paper, packaged 5,000 sheets to a box. One box normally sells for $18. A large bank offered to purchase 3,000 boxes at $14 per box. Costs per box are as follows: No variable marketing costs would be incurred on the order. The company is operating significantly below the maximum productive capacity. No fixed costs are avoidable.
Should Piersall accept the order?

• A) Yes, income will increase by $6,000.
• B) Yes, income will increase by $9,000.
• C) No, income will decrease by $3,000.
• D) No, income will decrease by $6,000.
• E) It doesn't matter; there will be no impact on income.

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Definitions:

National Defense

The government's role and responsibility in protecting a country and its citizens from external threats and maintaining internal security.

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, typically placing a heavier burden on wealthier individuals.

Benefits-Received Principle

A tax theory stating that those who benefit from government services should pay taxes in proportion to the amount of benefits they receive.

Government Expenditures

The total amount spent by the government on goods, services, and public projects.