Bradley Inc

question 12

Multiple Choice

Bradley Inc.has the capacity to make 100,000 windows.Bradley is currently operating at 100% capacity.The windows usually sell for $20.00 each.Costs for each window follow: The Army has offered to buy 10,000 windows for $12.00 each for barracks.Bradley should:

• A)Reject the offer because it currently does not have enough capacity to accept the order.
• B)Reject the order because the company will lose $20,000 on the order.
• C)Accept the offer because the company will realize $20,000 in additional contribution margin.
• D)Accept the offer because the company will realize $40,000 in additional contribution margin.

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Definitions:

Retained Earnings

The portion of net income that is retained by the company rather than distributed to its shareholders as dividends, accumulated over the company’s life.

Beginning Period

This refers to the starting point or the first date of a financial reporting period.

Expense Incurred

Costs that have been incurred by a business in the process of earning revenue, often recognized in the accounting period when they are incurred, regardless of when payment is made.