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Thompson Company has the following operating results: Sales (16,000 units at $10 per...

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Accounting

Thompson Company has the following operating results:

Sales (16,000 units at $10 per unit) $160,000
Direct materials and labor (100% variable) $96,000
Overhead (20% variable) 16,000
Selling and administrative expenses (all fixed) 32,000
Total Expenses 144,000
Income 16,000

Thompson has the capacity to produce 22,000 units. A foreign company offers to buy 4,000 units at $7.50 per unit. Other than an order-related $900 increase in fixed selling and administrative costs, selling these units would not increase Thompsons fixed costs.

If Thompson accepts the offer, its income will:

Group of answer choices

increase by $5,200

decrease by $6,000

increase by $6,000

decrease by $30,000

increase by $4,300

Answer & Explanation Solved by verified expert
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