Benjamin Company had the following results of operations for the past year: Sales (22,400 units at $10.00) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed selling and administrative expenses Income $ 224,000 44,800 89,600 4,480 85,120 17,920 44,800 $ 22,400 A foreign company (whose sales will not affect Benjamin's market) offers to buy 5.600 units at $7.50 per unit. In addition to variable costs, selling these units would increase fixed overhead by $840 and fixed selling and administrative costs by $420. Assuming Benjamin has excess capacity and accepts the offer, Its profits will:
Benjamin Company had the following results of operations for the past year: Sales (22,400 units at $10.00) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed selling and administrative expenses Income $ 224,000 44,800 89,600 4,480 85,120 17,920 44,800 $ 22,400 A foreign company (whose sales will not affect Benjamin's market) offers to buy 5.600 units at $7.50 per unit. In addition to variable costs, selling these units would increase fixed overhead by $840 and fixed selling and administrative costs by $420. Assuming Benjamin has excess capacity and accepts the offer, Its profits will:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Multiple Choice
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Increase by $42,000.
Increase by $8,400.
Decrease by $8,400.
Increase by $7,280.
Increase by $6,020.
Transcribed Image Text:Benjamin Company had the following results of operations for the past year:
Sales (22,400 units at $10.00)
Variable costs
Direct materials
Direct labor
Overhead
Contribution margin
Fixed costs
Fixed overhead
Fixed selling and administrative expenses
Income
$ 224,000
44,800
89,600
4,480
85, 120
17,920
44,800
$ 22,400
A foreign company (whose sales will not affect Benjamin's market) offers to buy 5,600 units at $7.50 per unit. In addition to variable costs, selling these units would increase fixed overhead by $840 and fixed selling and administrative costs by $420. Assuming Benjamin has
excess capacity and accepts the offer, Its profits will:
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