Benjamin Company Had the Following Results of Operations for the Past

question 148

Multiple Choice

Benjamin Company had the following results of operations for the past year: $\begin{array}{llr} \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) } &32,000&(144,000) \\ \text {Operating income } &&\$16,000\\\end{array}$
A foreign company (whose sales will not affect Benjamin'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.
- Assuming Benjamin has excess capacity and accepts the offer, its profits will:

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

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Definitions:

Intent to Use

Refers to a customer's expressed or implied intention to purchase and use a product or service in the future, often measured in marketing research to predict product success.

Trademark Law Revision Act

Legislation that amended federal trademark law, making significant changes such as allowing for the registration of a trademark based on intent to use, among other provisions.

Lanham Act

The primary federal trademark statute in the United States, governing trademarks, service marks, and unfair competition, enacted in 1946.

Tying Arrangement

A business practice in which a seller requires buyers to purchase an additional, often unrelated, product or service as a condition of buying a desired product.