Lattimer Company Had the Following Results of Operations for the Past

question 127

Multiple Choice

Lattimer Company had the following results of operations for the past year: $$\begin{array} { l r r r } \text { Sales } ( 15,000 \text { units at } \$ 12 ) & & \$ 180,000 \\\text { Variable manufacturing costs } & \$ 97,500 & \\\text { Fixed manufacturing costs } & 21,000 & \\\text { Selling and administrative expenses (all fixed) } & 36,000 & ( 154,500 ) \\\hline \text { Operating income } & & \$ 25,500 \\\hline \hline\end{array}$$ A foreign company offers to buy 5,000 units at $7.50 per unit.In addition to existing costs,selling these units would add a $0.25 selling cost for export fees.Lattimer's annual production capacity is 25,000 units.If Lattimer accepts this additional business,the special order will yield a:

• A)$2,000 loss.
• B)$8,250 loss.
• C)$3,750 profit.
• D)$3,250 loss.
• E)$5,000 profit.

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Definitions:

Goal-Sharing

A strategy where organizational goals are communicated to employees, ensuring that everyone understands their role in achieving these objectives, often linked to performance and incentives.

Gain-Sharing Plans

Incentive plans that reward employees for contributing to the company's efficiency and productivity improvements by sharing the resulting financial gains.

Profit-Sharing Plans

An incentive plan in which employees receive a portion of the company's profits, typically allocated based on the company's earnings over a set period.

Deferred Plan

A type of savings plan that allows employees to defer a portion of their income to a later date, typically used for retirement savings.