22.

Falcon Co. produces a single product. Its normal selling price is $27 per unit. The variable costs are $18 per unit. Fixed costs are $19,200 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,350 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n)

a.increase of $5,265

b.increase of $4,050

c.increase of $3,240

d.decrease of $2,430