The Following Information Relates to a Product Produced by Creamer

question 73

Multiple Choice

The following information relates to a product produced by Creamer Company: Fixed selling costs are £500,000 per year, and variable selling costs are £12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for £120 each. A customer has offered to buy 60,000 units for £90 each.
If the firm produces the special order, the effect on income would be a

• A) £360,000 increase.
• B) £360,000 decrease.
• C) £540,000 increase.
• D) £540,000 decrease.

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Definitions:

Age

A measurement of the duration of an individual's existence, typically expressed in years.

Behavioral Perspective

An approach in psychology focusing on how external environmental stimuli influence observable behavior, emphasizing the learning processes.

Learning

The process of acquiring knowledge, behaviors, skills, values, or preferences, often through instruction, study, or experience.

Introspection

Introspection is the examination or observation of one's own mental and emotional processes, an internal reflection.