The Following Information Relates to the Jasmine Company for the Upcoming

question 43

Multiple Choice

The following information relates to the Jasmine Company for the upcoming year.
$$\begin{array} { | l | r | r | } \hline & \text { Amount } & \text { Per Unit } \\\hline \text { Sales } & \$ 8,000,000 & \$ 20.00 \\\hline \text { Cost of goods sold } & 6,400,000 & 16.00 \\\hline \text { Gross margin } & 1,600,000 & 4.00 \\\hline \text { Operating expenses } & 600,000 & 1.50 \\\hline \text { Operating profits } & \$ 1,000,000 & \$ 2.50 \\\hline\end{array}$$
The cost of goods sold includes $2,400,000 of fixed manufacturing overhead;the operating expenses include $200,000 of fixed marketing expenses.A special order offering to buy 50,000 units for $15.00 per unit has been made to Jasmine.Fortunately,there will be no additional operating expenses associated with the order and Jasmine has sufficient capacity to handle the order.How much will operating profits increase if Jasmine accepts the special order?

• A) $50,000.
• B) $125,000.
• C) $200,000.
• D) $250,000.

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Definitions:

Managerial Learning Curve

The process by which managers gain experiential knowledge that improves their decision-making, efficiency, and effectiveness over time.

Unrelated Diversification

A business strategy where a company expands into industries or markets that are not related to its existing business activities.

Acquiring New Businesses

The process by which a company purchases or takes over other businesses to expand its operations, market reach, or product offerings.

Related Diversification

A strategy where a business expands into new areas that have a connection or relation to its existing operations or markets.