Ratzlaff Company Has a Current Production Level of 20,000 Units

question 162

Multiple Choice

Ratzlaff Company has a current production level of 20,000 units per month.Unit costs at this level are: $$\begin{array} { l r } \text { Direct materials } & \$ 0.25 \\\text { Direct labor } & 0.40 \\\text { Variable overhead } & 0.15 \\\text { Fixed overhead } & 0.20 \\\text { Marketing - fixed } & 0.20 \\\text { Marketing/distribution - variable } & 0.40\end{array}$$ Current monthly sales are 18,000 units.Jim Company has contacted Ratzlaff Company about purchasing 1,500 units at $2.00 each.Current sales would NOT be affected by the one-time-only special order,and variable marketing/distribution costs would NOT be incurred on the special order.What is Ratzlaff Company's change in operating profits if the special order is accepted?

• A) $400 increase in operating profits
• B) $400 decrease in operating profits
• C) $1,800 increase in operating profits
• D) $1,800 decrease in operating profits

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Definitions:

Gluteal Tuberosity

The bony prominence on the proximal femur where some of the gluteal muscles attach.

Pelvic Bone

A structure at the base of the spine consisting of three bones: ilium, ischium, and pubis, supporting the spine and protecting lower abdominal and internal reproductive organs.

Fibula

A long, thin bone located on the lateral side of the tibia, in the lower leg.

Calcaneus

Also known as the heel bone, the calcaneus is crucial for walking, running, and jumping, absorbing impact and providing leverage.