Zephram Corporation has a plant capacity of 200,000 units per month. Unit costs at capacity are:

Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Zephram Corporation about purchasing 2,500 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Zephram's change in operating profits if the one-time-only special order is accepted?
A) $11,000 increase
B) $31,500 increase
C) $22,500 increase
D) $49,000 increase

Question

Zephram Corporation has a plant capacity of 200,000 units per month. Unit costs at capacity are:

Current monthly sales are 190,000 units at $30.00 each. Q, Inc., has contacted Zephram Corporation about purchasing 2,500 units at $24.00 each. Current sales would not be affected by the one-time-only special order. What is Zephram's change in operating profits if the one-time-only special order is accepted?
A) $11,000 increase 
B) $31,500 increase 
C) $22,500 increase 
D) $49,000 increase

Quizplus · Accepted Answer

($6.00 + $5.00 + $4.00 + $4.60) = $19.60
($24.00 - $19.60) × 2,500 = $11,000 increase

Zephram Corporation Has a Plant Capacity of 200,000 Units Per