Bluebird Manufacturing has received a special one-time order for 15,000 bird feeders at $3.00 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes $2.25 of variable costs and $1.25 of fixed costs. If the special offer is accepted, there will be no incremental fixed cost. If Bluebird accepts this additional business, the effect on income will be:

Multiple Choice

• $45,000 increase.

• $11,250 increase.

• $33,750 increase.

• $7,500 decrease.

• $33,750 decrease.