Werry Company Is About to Introduce a New Product

Multiple Choice

Werry Company is about to introduce a new product. It is expected that the following costs would be incurred when 25,000 units are produced and sold in a year: Werry Company uses the absorption costing approach to cost-plus pricing as described in the text.
-After introducing the product at a markup of 90%,the company finds that it has excess capacity.A foreign dealer has offered to purchase 4,000 units of the product at a special price of $32 per unit.This sale would not disturb regular business.If the special price is accepted on the 4,000 units,the effect on total profits for the year will be a:

A) 56,000 increase
B) 76,800 increase
C) 16,000 increase
D) 48,000 increase