1. Black Cat Corporation manufactures a product with the following full unit costs at a volume of 4,000 units:

   Direct materials	$200
   Direct labor	80
   Manufacturing overhead (30% variable)	150
   Selling expenses (50% variable)	50
   Administrative expenses (10% variable)	80
   Total per unit	$560

   A company recently approached Black Cat's management with an offer to purchase 450 units for $550 each. Black Cat currently sells the product to dealers for $800 each. Black Cat's capacity is sufficient to produce the extra 450 units. No selling expenses would be incurred on the special order. If Black Cat's management accepts the offer, profits will:

   Decrease by $120,000

   Increase by $66,800

   Increase by $97,650

   Decrease by $24,000