Cornish Company Had the Following Results of Operations for the Past

question 142

Multiple Choice

Cornish Company had the following results of operations for the past year: $\begin{array}{lrr}\text { sales (20,000 units at \$22 } & \$ 440,000 \\\text { Direct materials and direct labor } & \$ 200,000 \\\text { Overhead (40\% variable) } & 100,000 & \\\text { Selling and administrative expenses (all fixed) } & 92,000 & (392,000) \\\hline \text { Operating income } & & \$ 48,000 \\\hline \hline\end{array}$ A foreign company offers to buy 3,000 units at $17.00 per unit.In addition to variable manufacturing costs,selling these units would increase fixed overhead by $500 and selling and administrative costs by $1,000.If Cornish accepts the offer,its profits will:

• A)Decrease by $4,500.
• B)Increase by $4,500.
• C)Decrease by $300.
• D)Increase by $13,500.
• E)Increase by $15,000.

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Definitions:

Minimal Government Interference

Refers to a political and economic principle advocating for reduced government involvement in economic decisions and private enterprises.

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The global ecological system integrating all living beings and their relationships, including their interaction with elements of the lithosphere, hydrosphere, and atmosphere.

Renewable Energy

Energy sources that are replenished naturally and sustainably, such as solar, wind, hydro, geothermal, and biomass, offering an alternative to fossil fuels.