Thompson Company has the following operating results: Sales (16,000 units at $10 per...
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Accounting
Thompson Company has the following operating results:
Sales (16,000 units at $10 per unit)
$160,000
Direct materials and labor (100% variable)
$96,000
Overhead (20% variable)
16,000
Selling and administrative expenses (all fixed)
32,000
Total Expenses
144,000
Income
16,000
Thompson has the capacity to produce 22,000 units. A foreign company offers to buy 4,000 units at $7.50 per unit. Other than an order-related $900 increase in fixed selling and administrative costs, selling these units would not increase Thompsons fixed costs.
If Thompson accepts the offer, its income will:
Group of answer choices
increase by $5,200
decrease by $6,000
increase by $6,000
decrease by $30,000
increase by $4,300
Answer & Explanation
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