Missouri Company Has a Current Production Capacity Level of 200,000

question 61

Multiple Choice

Missouri Company has a current production capacity level of 200,000 units per month.At this level of production,variable costs are $0.60 per unit and fixed costs are $0.50 per unit.Current monthly sales are 173,000 units.Gates Company has contacted Missouri Company about purchasing 20,000 units at $1.00 each.Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order.If the order is accepted,what is Missouri Company's change in profits?

• A) $8,000 increase
• B) $8,000 decrease
• C) $10,000 increase
• D) $10,000 decrease

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Definitions:

Financial Statements

Reports that provide an overview of a business's financial condition, including income statement, balance sheet, and cash flow statement.

Financial Statements

Reports that summarize the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement, among others.

Net Income

The total profit or loss of a company after all revenues, costs, and expenses have been accounted for.