Minnesota Company Has No Beginning and Ending Inventories,and Has the Following

question 122

Multiple Choice

Minnesota Company has no beginning and ending inventories,and has the following data about its only product:
$\begin{array}{ll}\text { Fixed manufacturing costs } & \$ 92,000 \\\text { Fixed selling and administrative costs } & \$ 69,000 \\\text { Variable manufacturing costs } & \$ 1,030,000 \\\text { Variable selling and administrative costs } & \$ 120,000 \\\text { Selling price(per unit) } & \$ 125\end{array}$
$\begin{array} { l } \text {Units produced and sold }& 23,000\\\end{array}$

Assume there is excess capacity.The company has received a special order for 1,000 units at $60.00 per unit.If the special order is accepted,what will be the effect on net income?

• A) net income increases by $3,000
• B) net income increases by $6,000
• C) net income increases by $10,000
• D) net income increases by $15,220

---

Definitions:

Total Utility

The total satisfaction or benefit received from consuming a particular quantity of a good or service.

Donuts

A sweet, fried or baked pastry, often circular with a hole in the middle, available in various flavors and toppings.

Day

A day is a unit of time equivalent to 24 hours or the period it takes for the Earth to complete one full rotation on its axis.

Marginal Utility

The increased happiness or advantage received from using one more unit of a good or service.