[Solved] The Arthur Company Manufactures Kitchen Utensils

Question 28
Multiple Choice

The Arthur Company manufactures kitchen utensils. The company is currently producing well below its full capacity. The Benton Company has approached Arthur with an offer to buy 20,000 utensils at $0.75 each. Arthur sells its utensils wholesale for $0.85 each; the average cost per unit is $0.83, of which $0.12 is fixed costs. If Arthur were to accept Benton's offer, what would be the increase in Arthur's operating profits?

A) $400.
B) $800.
C) $1,600.
D) $2,000.

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