First Image Has a Plant Capacity of 80,000 Units Per

question 161

Multiple Choice

First Image has a plant capacity of 80,000 units per month.Unit costs at capacity are: Current monthly sales are 78,000 units at $12.60 each.Computer Output Management has contacted First Image about purchasing 2,000 units at $12.00 each.Current sales would not be affected by the special order.What is First Image's change in profits if the order is accepted?

• A)$7,400 increase
• B)$8,600 increase
• C)$4,400 increase
• D)$2,600 decrease
• E)$3,600 decrease

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Definitions:

Excess Space

Excess space refers to the additional or unused space within a property or facility that exceeds the current needs of the occupants or users.

Materiality Constraint

An accounting principle that allows for the exclusion of insignificant financial information from reports because it would not impact decision-making.

Accounting Information

Data related to financial transactions and status of a business, used for analysis, decision making, and financial reporting.

Ending Retained Earnings

The amount of net income left over for the business after it has paid out dividends to its shareholders, captured at the close of an accounting period.