First Image Has a Plant Capacity of 80,000 Units Per

question 66

Multiple Choice

First Image has a plant capacity of 80,000 units per month.Unit costs at capacity are:

Current monthly sales are 78,000 units at $12.60 each.Computer Output Management has contacted First Image about purchasing 2,000 units at $12.00 each.Current sales would not be affected by the special order.What is First Image's change in profits if the order is accepted?

• A)$7,400 increase
• B)$8,600 increase
• C)$4,400 increase
• D)$2,600 decrease
• E)$3,600 decrease

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Definitions:

Worthless Cheque

A cheque that cannot be processed because the account it is drawn on does not have sufficient funds.

Innocent Purchaser

An individual who buys property without knowledge of any existing claims, liens, or encumbrances against it.

Consideration

The worth, including currency, services, or items, that is traded between entities in an agreement.

Contract Void

A contract void is a contract that is deemed legally nonexistent and unenforceable from the outset, due to illegality or other serious defects.