Fern Valley Ltd Reports the Following Data from This Year's

question 54

Multiple Choice

Fern Valley Ltd reports the following data from this year's master budget:
$$\begin{array} { l c r } & \text { Per unit } & \text { Total } \\\text { Variable manufacturing cost } & \$ 18 & \\\text { Fixed manufacturing cost } & \$ 6 & \$ 24000 \\\text { Fixed selling and administrative expense } & \$ 2 & \$ 4000\end{array}$$
Fern Valley Ltd's capacity is 20 000 units per year, and the normal selling price is $35 per unit. A one-time-only order for 1200 units has been received at a special price of $30 per unit. The order would not disturb regular business. If the order is accepted, overall profit will increase by:

• A) $ 4 800
• B) $ 6 000
• C) $ 8 000
• D) $14 400

---

Definitions:

Validity

The extent to which a test measures or predicts what it is supposed to.

G Factor

A concept in psychology that refers to the general intelligence factor believed to underlie all cognitive abilities.

Academic Aptitude Test

A standardized test designed to measure a student's potential to succeed in an academic setting.

College Students

Individuals enrolled in an institution of higher education, usually undertaking undergraduate or postgraduate studies.