Sprint Company Makes Special Equipment Used in Cell Towers

question 61

Multiple Choice

Sprint Company makes special equipment used in cell towers.Each unit sells for $400.Sprint produces and sells 12,500 units per year.They have provided the following income statement data: A foreign company has offered to buy 80 units for a reduced price of $300 per unit.The marketing manager says the sale will not negatively affect the company's regular sales.The sales manager says that this sale will require incremental selling & administrative costs,as it is a one-time deal.
-The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs.If Sprint accepts the deal,how will this impact operating income?

• A)operating income will increase by $15,040
• B)operating income will decrease by $15,040
• C)operating income will increase by $24,000
• D)operating income will decrease by $24,000

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Definitions:

Eustress

Positive stress that motivates and energizes individuals, leading to improved performance and well-being.

GAS

Stands for General Adaptation Syndrome, detailing the body's physiological response to stress through stages of alarm, resistance, and exhaustion.

Alarm

A device or system designed to alert individuals to a specific danger or a reminder of an event.

Resistance

The opposition or counteracting force encountered during physical exercises or in the context of infectious agents battling against the immune response.