Yellco Inc., a toy manufacturer, provided the following information: $$\begin{array} { l r }
\text { Domestic unit sales price } & \$ 50 \
\text { Unit manufacturing costs: } & \
\text { Variable } & 10 \
\text { Fixed } & 8
\end{array}$$ ? The company has received an offer from an exporter for 9,000 units of toys at $60 per unit.The additional business is not expected to affect the normal production or domestic sales prices of Yellco Inc.What is the amount of gain or loss from acceptance of the offer?
A) $450,000 gain
B) $162,000 loss
C) $315,000 loss
D) $162,000 gain

Question

Yellco Inc., a toy manufacturer, provided the following information: $$\begin{array} { l r } 
\text { Domestic unit sales price } & \$ 50 \
\text { Unit manufacturing costs: } & \
\text { Variable } & 10 \
\text { Fixed } & 8
\end{array}$$ ? The company has received an offer from an exporter for 9,000 units of toys at $60 per unit.The additional business is not expected to affect the normal production or domestic sales prices of Yellco Inc.What is the amount of gain or loss from acceptance of the offer?
A) $450,000 gain
B) $162,000 loss
C) $315,000 loss
D) $162,000 gain

Quizplus · Accepted Answer

The additional revenue from the export order is $9,000 x $60 = $540,000. The additional variable costs are $9,000 x $10 = $90,000. The additional fixed costs are zero. Therefore, the additional profit from the export order is $540,000 - $90,000 = $450,000.

Yellco Inc ? the Company Has Received an Offer from an Exporter