Markson Company had the following results of operations for the past year: Contribution margin...
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Accounting
Markson Company had the following results of operations for the past year:
Contribution margin income statement Per Unit Annual Total
Sales (10,600 units) $ 20.00 $ 212,000
Variable costs
Direct materials 4.25 45,050
Direct labor 6.00 63,600
Overhead 2.00 21,200
Contribution margin 7.75 82,150
Fixed costs
Fixed overhead 4.25 45,050
Income $ 3.50 $ 37,100
A foreign company offers to buy 3,300 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $2,640 for the purchase of special tools. Marksons annual productive capacity is 15,900 units. If Markson accepts this additional business, its profits will increase or decrease by how much?
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