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Question $3$

Boris Company has multiple business units. Unit B has the following information: sales revenue is $$300,000$; variable expenses are $$200,000$; fixed expenses are $$150,000.$ Fixed expenses$$which are mostly represented by traceable $($and avoidable$)$ business unit costs $($e$.$g$.,$ rent, depreciation, etc.$)$ are calculated for each business unit separately.

What is the effect on Boris Company as a whole if Unit B were eliminated?

Total profit would increase by $$50,000.$

Total profit would decrease by $$50,000.$

Total profit would decrease by $$300,000.$

Total profit would not change.

Status: $[$object Object$]$

$1$ point

Joseph Company incurs per$-$unit costs of $$11$ in variable costs and $$4$ in fixed costs to produce its main product, which sells for $$24.$ Joseph Company currently has no excess capacity.

A new customer in the market, Katherine, offers to purchase $2,500$ units at $$16$ each.

If the special order is accepted, Joseph Company would have to produce the units for Katherine with capacity that was otherwise being used to produce units for their current customers.

From a financial perspective, which of the following is true regarding the decision of whether Joseph Company should accept Katherine$$s special order?

Joseph should accept the offer, because each unit sold to Katherine would increase profit by $$5.$

Joseph should decline the offer, because each unit sold to Katherine would decrease profit by $$8.$

Joseph is indifferent because fixed costs would be the same regardless.

Joseph should accept the offer, because each unit sold to Katherine would increase profit by $$1.$

Status: $[$object Object$]$

$1$ point

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