Wisconsin Company Has a Current Production Capacity Level of 200,000

question 28

Multiple Choice

Wisconsin Company has a current production capacity level of 200,000 units per month.At this level of production,variable costs are $0.90 per unit and fixed costs are $0.50 per unit.Current monthly sales are 164,500 units.Gates Company has contracted Wisconsin Company about purchasing 20,000 units at $2.00 each.Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order.If the order is accepted,what is Wisconsin Company's increase in costs?

• A)$18,000
• B)$20,000
• C)$24,000
• D)$40,000

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Definitions:

Market Growth

An increase in the demand for a particular product or service over time, often measured by changes in sales and market share.

Stealing Share

A competitive strategy aimed at gaining market share from competitors by attracting their customers, rather than expanding the overall market.

Forward Selling

The practice of selling goods that are not immediately available but will be in the future.

Forward Buying

Purchasing large quantities of goods when prices are lower to use or sell over time, often to hedge against price increases.