Managerial Accounting Question involving Variable Cost and Profit

Managerial Accounting Question involving Variable Cost and Profit

Assume that boots normally sell for $90 per pair. An exporter has approached Park about buying 1,000 pairs of boots
for a one-time export deal for $80 per pair. Park’s variable cost per pair is $35.00, however, $3.00 per unit
of the normal variable cost could be avoided on this sale, but Park would have to pay a fixed cost $4,000 to have the boots shipped. Park has capacity to produce this order, and no regular sales will be affected. If Park accepts this order:

	a.	Profits will decrease by $10,000
	b.	Profits will increase by $41,000
	c.	Profits will increase by $44,000
	d.	Profits will increase by $48,000

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