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Harcourt Marketing (HM) has the capacity to produce 10,000 fax machines per year. HM currently produces and sells 7,000 units per year. The fax machines normally sell for $100 each. Modem Products has offered to buy 2,000 fax machines from HM for $60 each. Unit-level costs associated with manufacturing the fax machines are $15 each for direct labor and $40 each for direct materials. Product-level and facility-sustaining costs are $50,000 and $65,000, respectively.

What is HM's current profit (net income)?

a. $115,000

b. $120,000

c. $200,000

d. $315,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M996126

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