The following are the Jensen Corporation's unit costs of making and selling an item at its capacity of 1, 000 units per month: Present sales amount to 700 units per month.Fixed costs, both manufacturing and selling and administrative, are constant within the relevant range between 700 units and 1, 000 units.Direct labor is a variable cost. An order has been received from a customer in a foreign market for 100 units.The order would not affect current sales.The variable selling and administrative expenses would have to be incurred on this special order as well as for all other sales.How much will the company's profits be increased or (decreased)if it prices the 100 units at $7 each?
A)$(30)
B)$150
C)$0
D)$310

Question

The following are the Jensen Corporation's unit costs of making and selling an item at its capacity of 1, 000 units per month:  Present sales amount to 700 units per month.Fixed costs, both manufacturing and selling and administrative, are constant within the relevant range between 700 units and 1, 000 units.Direct labor is a variable cost. An order has been received from a customer in a foreign market for 100 units.The order would not affect current sales.The variable selling and administrative expenses would have to be incurred on this special order as well as for all other sales.How much will the company's profits be increased or (decreased)if it prices the 100 units at $7 each?
A)$(30) 
B)$150 
C)$0 
D)$310

Quizplus · Accepted Answer

The Answer of The following are the Jensen Corporation's unit costs of making and selling an item at its capacity of 1, 000 units per month:  Present sales amount to 700 units per month.Fixed costs, both manufacturing and selling and administrative, are constant within the relevant range between 700 units and 1, 000 units.Direct labor is a variable cost. An order has been received from a customer in a foreign market for 100 units.The order would not affect current sales.The variable selling and administrative expenses would have to be incurred on this special order as well as for all other sales.How much will the company's profits be increased or (decreased)if it prices the 100 units at $7 each?
A)$(30) 
B)$150 
C)$0 
D)$310

The Following Are the Jensen Corporation's Unit Costs of Making