The Minton Company Has Gathered the Following Information for a Unit

question 118

Multiple Choice

The Minton Company has gathered the following information for a unit of its most popular product:
$$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 6 \\\hline \text { Direct labor } & 3 \\\hline \text { Overhead (40\% variable) } & - 5 \\\hline \text { Cost to manufacture } & 14 \\\hline \text { Desired markup (60\%) } & - 7 \\\hline \text { Target selling price } & 21 \\\hline\end{array}$$
The above cost information is based on 4,000 units.A foreign distributor has offered to buy 1,000 units at a price of $16 per unit.This special order would not disturb regular sales.Variable shipping and other selling expenses would be an additional $1 per unit for the special order.If the special order is accepted,Minton's operating profits will increase by:

• A) $1,000.
• B) $1,600.
• C) $2,000.
• D) $4,000.

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Definitions:

Smooth

Pertaining to smooth muscle, an involuntary non-striated muscle found within the walls of organs and structures such as the digestive tract, blood vessels, and urinary bladder.

Cardiac

Pertaining to the heart and its functions or diseases.

Skeletal

Relating to the skeleton, the bony framework of the body that protects internal organs and supports the body structure.

Accomplishments

Achievements or successes that have been completed or attained, often through effort or skill.