First Image has a plant capacity of 80,000 units per month. Unit costs at capacity are:
Current monthly sales are 78,000 units at $12.60 each. Computer Output Management has contacted First Image about purchasing 2,000 units at $12.00 each. Current sales would not be affected by the special order. What is First Image's change in profits if the order is accepted?
A) $7,400 increase
B) $8,600 increase
C) $4,400 increase
D) $2,600 decrease
E) $3,600 decrease

Question

First Image has a plant capacity of 80,000 units per month. Unit costs at capacity are:
 Current monthly sales are 78,000 units at $12.60 each. Computer Output Management has contacted First Image about purchasing 2,000 units at $12.00 each. Current sales would not be affected by the special order. What is First Image's change in profits if the order is accepted?
A) $7,400 increase 
B) $8,600 increase 
C) $4,400 increase 
D) $2,600 decrease 
E) $3,600 decrease

Quizplus · Accepted Answer

($2.00 + 3.00 + 1.50 + 1.80) = $8.30
($12.00 - 8.30) × 2,000 = $7,400 increase

First Image Has a Plant Capacity of 80,000 Units Per