28] Markson Company had the following results of operations for the past year: A

Question

28] Markson Company had the following results of operations for the past year:

A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $15.20 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,680 for the purchase of special tools. Markson's annual productive capacity is 12,000 units. If Markson accepts this additional buisness, its profits will

Sales (8,000 units at $19.50) $166,400 Variable manufacturing costs $89,200 Fixed manufacturing costs 15,800 Variable selling and administrative expenses 15,200 Fixed selling and administrative expenses 20,800 (141,000) Operating income $25,400

Explanation / Answer

If Markson accepts this additional buisness, its profits will increase by 6,420 Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Revenue from order = 2000*15.20              30,400.00 Less Costs: Variable Manufacturing costs = 89200/8000*2000              22,300.00 Incremental Fixed overhead                1,680.00 Total Costs              23,980.00 Income = 30400 - 23980                6,420.00 Note - We have assumed selling costs will not be incurred.

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