Markson Company had the following results of operations for the past year: Sales (8,000 units at $20) $160,000 Variable manufacturing costs$86,000 Fixed manufacturing costs 15,000 Variable administrative expenses 12,000 Fixed selling and administrative expenses 20,000 (133,000) Operating income $27,000 A foreign company offers to buy 2,000 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $1,600 for the purchase of special tools. Markson's annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:
A. Increase by $3,500.
B. Decrease by $5,650.
C. Decrease by $5,100.
D. Decrease by $1,600.
E. Increase by $1,900.
Answer: E
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Answer the following statement(s) true (T) or false (F)
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