Ratzlaff Company has a current production level of 20,000 units per month. Unit costs at this level are:

Current monthly sales are 18,000 units. Jamil Company has contacted Ratzlaff Company about purchasing 1,500 units at $2.00 each. Current sales would not be affected by the one-time-only special order, and variable marketing/distribution costs would not be incurred on the special order. What is Ratzlaff Company's change in operating profits if the special order is accepted?
A) $400 increase in operating profits
B) $1,800 increase in operating profits
C) $400 decrease in operating profits
D) $1,800 decrease in operating profits

Question

Ratzlaff Company has a current production level of 20,000 units per month. Unit costs at this level are:
 
Current monthly sales are 18,000 units. Jamil Company has contacted Ratzlaff Company about purchasing 1,500 units at $2.00 each. Current sales would not be affected by the one-time-only special order, and variable marketing/distribution costs would not be incurred on the special order. What is Ratzlaff Company's change in operating profits if the special order is accepted?
A) $400 increase in operating profits 
B) $1,800 increase in operating profits 
C) $400 decrease in operating profits 
D) $1,800 decrease in operating profits

Quizplus · Accepted Answer

The Answer is B

Ratzlaff Company Has a Current Production Level of 20,000 Units