Question
Baden Company manufactures a product with a unitvariable cost of $50 and a unit sales price of $88. Fixedmanufacturing costs were $240,000 when 10,000 units
Baden Company manufactures a product with a unitvariable cost of $50 and a unit sales price of $88. Fixedmanufacturing costs were $240,000 when 10,000 units were producedand sold. The company has a one-time opportunity to sell anadditional 1,000 units at $70 each in a foreign market which wouldnot affect its present sales. If the company has sufficientcapacity to produce the additional units, acceptance of the specialorder would affect net income as follows:
a)income would decrease by 4,000
b) income would increase by 4,000
c) income would increase by 70,000
d) income would increase by 20,000
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