Farnsworth Television Makes and Sells Portable Television Sets Farnsworth Has Received a Special Order for a Sale of Regularly

question 1

Multiple Choice

Farnsworth Television makes and sells portable television sets. Each television regularly sells for £200. The following cost data per television are based on a full capacity of 12,000 televisions produced each period: $\begin{array}{lrr} \text { Direct materials } &£75\\ \text { Direct labour } &£55\\ \text {Manufacturing overhead ( \( 75 \% \) variable and \( 25 \% \) unavoidable fixed) } &£48\\\end{array}$


Farnsworth has received a special order for a sale of 2,500 televisions to an overseas customer. The only selling costs that would be incurred on this order would be £10 per television for shipping. Farnsworth is now selling 7,200 televisions through regular distributors each period. What should be the minimum selling price per television in negotiating a price for this special order

• A)£200
• B)£166
• C)£178
• D)£176

Calculate the income tax expense and net cash flows from capital budgeting projects.

Understand the treatment of working capital in net present value analysis.

Assess the tax implications of capital budgeting decisions.

Calculate and understand incremental sales, operating expenses, and renovation expenses in project evaluation.

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Definitions:

Modernization Theory

A theory suggesting that societal development occurs through a series of progressive stages, typically moving from traditional to modern industrial societies.

Traditional Society

A society that is largely based on customs, traditions, and pre-modern economic activities such as agriculture.

Modern Society

A societal phase marked by advanced technology, industrialization, rationality, and complex social structures, differentiating it from earlier societies.

Cultural Diversity

The existence of a variety of cultural or ethnic groups within a society, celebrated for enriching the social fabric.