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:

Information Search

The process that consumers undertake to gather and evaluate information about products and services that will satisfy a need or want.

Product Knowledge

Understanding and information regarding a product’s features, benefits, usage, and application.

Evoked Set

The group of brands or products an individual considers as options in a purchase decision.

Inept Set

A group of products or brands a consumer is aware of but deliberately chooses to avoid.