Thompson Company Had the Following Results of Operations for the Past

question 55

Multiple Choice

Thompson Company had the following results of operations for the past year: $$\begin{array} { l r r } \text { Sales } ( 16,000 \text { units at } \$ 10 ) && \$ 160,000 \\\text { Direct materials and direct labor } & \$ 96,000 & \\\text { Overhead (20\% variable) } & 16,000 \\\text { Selling and administrative expenses (all fixed) } &\underline { 3 2 , 0 0 0 } & \underline { ( 144,000 ) }\\\text { Operating income } && \underline { \$ 16,000}\end{array}$$ A foreign company (whose sales will not affect Thompson'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.If Thompson accepts the offer, its profits will:

• A)Increase by $30,000
• B)Increase by $ 6,000
• C)Decrease by $ 6,000
• D)Increase by $ 5,200
• E)Increase by $ 4,300

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Definitions:

Selective Media

Laboratory media designed to support the growth of specific microorganisms while inhibiting others, used for microbial isolation.

Culturette

A sterile swab or collection device used for obtaining specimens from the body, often for microbiological culture.

Lowenstein-Jensen (L-J) Slant

A growth medium used in microbiology to culture and isolate Mycobacteria, especially Mycobacterium tuberculosis.

Acid-Fast Stain

A laboratory staining technique used to detect bacteria that are not decolorized by acid-alcohol, like Mycobacterium tuberculosis.