Zephram Corporation Has a Plant Capacity of 200,000 Units Per

question 82

Multiple Choice

Zephram Corporation has a plant capacity of 200,000 units per month.Unit costs at capacity are: $$\begin{array} { l r } \text { Direct materials } & \$ 4.00 \\\text { Direct labor } & 6.00 \\\text { Variable overhead } & 3.00 \\\text { Fixed overhead } & 1.00 \\\text { Marketing-fixed } & 7.00 \\\text { Marketing/distribution-variable } & 3.60\end{array}$$ Current monthly sales are 190,000 units at $30.00 each.Q,Inc.,has contacted Zephram Corporation about purchasing 2,000 units at $24.00 each.Current sales would not be affected by the one-time-only special order.What is Zephram's change in operating profits if the one-time-only special order is accepted?

• A) $14,800 increase
• B) $17,200 increase
• C) $22,000 increase
• D) $33,200 increase

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Definitions:

Current Monetary Assets

Assets held by a company that are in the form of cash or can be easily converted into cash within a short period, typically one year.

Total Liabilities and Equity

The sum of all liabilities (what a company owes) plus the owners' equity (the original investment plus any retained earnings).

Exchange Rates

The rate at which one currency can be exchanged for another, affecting international trade and investments.

Exchange Gain/Loss

Exchange gain or loss results from foreign currency transactions due to changes in exchange rates between the initial transaction and settlement dates or reporting dates.