ABC Company manufactures coffee tables. For the first eight months of 2020, the company reported the following operating results while operating at 80% of plant capacity:

Sales (250,000 units) $85,000,000

Cost of goods sold 57,000,000

Gross profit 28,000,000

Operating expenses 8,000,000

Net income $20,000,000

An analysis of costs and expenses reveals that variable cost of goods sold is $180 per unit and variable operating expenses are $20 per unit.

In September, ABC Company receives a special order for 45,000 machines at $200 each from a major coffee shop franchise. Acceptance of the order would result in $22,500 of shipping costs but no increase in fixed expenses.

Should ABC Company accept the special order?

Select one:

a. No, this order would decrease operating income by $132,500.

b. Yes, this order would increase operating income by $32,500.

c. No, this order would decrease operating income by $22,500.

d. No, this order would decrease operating income by $45,500.

ABC Company manufactures coffee tables. For the first eight months of 2020, the company reported the following operating results while operating at 80% of plant capacity:

Sales (250,000 units) $85,000,000

Cost of goods sold 57,000,000

Gross profit 28,000,000

Operating expenses 8,000,000

Net income $20,000,000

An analysis of costs and expenses reveals that variable cost of goods sold is $180 per unit and variable operating expenses are $20 per unit.

In September, ABC Company receives a special order for 45,000 machines at $200 each from a major coffee shop franchise. Acceptance of the order would result in $22,500 of shipping costs but no increase in fixed expenses.

Should ABC Company accept the special order if ABC Company receives a special order for 45,000 machines at $230 per unit?

Select one:

a. No, this order would decrease operating income by $1,327,500.

b. No, this order would decrease operating income by $12,500.

c. Yes, this order would increase operating income by $1,327,500.

d. Yes, this order would increase operating income by $450,500.