Markson Company Had the Following Results of Operations for the Past

question 35

Multiple Choice

Markson Company had the following results of operations for the past year: $\begin{array}{lrr}\text { Sales }(8,000 \text { units at } \$ 20) & & \$ 160,000 \\\text { Variable manufacturing costs } & \$ 86,000 & \\\text { Fixed manufacturing costs } & 15,000 & \\\text { Variable administrative expenses } & 12,000 & \\\text { Fixed selling and administrative expenses } & 20,000 & (133,000) \\\hline\text {Operating income}&&\$ 27,000 \\\hline\end{array}$ A foreign company offers to buy 2,000 units at $14 per unit.In addition to variable manufacturing and administrative costs,selling these units would increase fixed overhead by $1,600 for the purchase of special tools.Markson's annual productive capacity is 12,000 units.If Markson accepts this additional business,its profits will:

• A)Increase by $3,500.
• B)Decrease by $5,650.
• C)Decrease by $1,600.
• D)Increase by $1,900.
• E)Decrease by $5,100.

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Definitions:

Research Study

A structured process of investigation aimed at discovering, interpreting, or revising facts or theories.

Laboratory Observation

A research method where subjects are observed in a controlled environment to minimize external variables.

Naturalistic Observation

A research method in which subjects are observed in their natural environment without any manipulation by the observer.

Research Study

A systematic investigation, including research development, testing, and evaluation, designed to develop or contribute to generalizable knowledge.