Question
Blue Spruce Manufacturing has an annual capacity of 80,900 units per year. Currently, the company is making and selling 78,200 units a year. The normal
Blue Spruce Manufacturing has an annual capacity of 80,900 units per year. Currently, the company is making and selling 78,200 units a year. The normal sales price is $100 per unit, variable costs are $70 per unit, and total fixed expenses are $2,000,000. An out-of-state distributor has offered to buy 5,700 units at $80 per unit. Blue Spruce's cost structure should not change as a result of this special order. By how much will Blue Spruce's income change if the company accepts this order?
"Blue Spruce net income will [increase/decrease] by $x if it accepts the special order."
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