Question
ABC, Inc. sells motorboats for $5,000 each. The business receives a special order from a food delivery company that wants 20 motorboats and offers to
ABC, Inc. sells motorboats for $5,000 each. The business receives a special order from a food delivery company that wants 20 motorboats and offers to pay $4,000 per motorboat. ABC, Inc. incurs $2,000 of variable cost per unit. Assuming that ABC has sufficient capacity to produce the additional units, how would the company's net operating income be affected if it accepts this order?
Operating income would decrease by $30,000.
Operating income would increase by $30,000.
Operating income would increase by $50,000.
Operating income would increase by $40,000.
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