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:

Investment Project

An endeavor in which resources are invested with the goal of generating future returns, typically involving financial, time, or other forms of resources.

End of Project

The point in time when all objectives of a project have been achieved and all deliverables have been completed.

Operating Costs

Expenses associated with the day-to-day operation of a business, excluding financing costs and taxes.

Useful Life

The estimated period over which an asset is expected to be usable for its intended purpose, affecting its depreciation.