Question

A foreign company (whose sales will not affect Benjamin's market) offers to buy 3,300 units at $6.73 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $530 and selling and administrative costs by $230. If Benjamin accepts the offer, its profits will:

Answer 1

$21,449

Step-by-step explanation:

Lets summarize the information first,

We can assume $6.73 is profit margin per unit or contribution.

We simply multiply this by total units to get total gross profit

Gross profit = 6.73 * 3300 = $22,209

So subtract incremental fixed costs to get to profits

Net Profits = 22,209 - 530 - 230 = $21,449

Hope that helps.