A company manufactures running clothes. Due to excess copacity, they are trying to get a department store
to start carrying their clothes to keep the plant busy. The department store has agreed to purchase 50,000
pairs of running shorts for a speical order price of $4.00 each.
The company's current cost per unity based on the current production of 200,000 pairs of shorts includes the
following:
Direct material			1.5
Direct labor			0.75
Variable manufacturing overhead	0.25
Fixed manufacturing overhead	1.15
Fixed administrative costs	0.85
Variable selling cost		0.5
Total cost per Unit		$ 5.00
The variable selling costs will be reduced by one-half for the special order
How much will profits increase if the company accepts the special order?
$ 62,500
$ 60,500
$ 17,500
$ 75,000