Bluebird Manufacturing has received a special one-time order for 16,700 bird feeders at $4.70 per unit. Bluebird currently produces and sells 75,000 units at $8.70 each. This level represents 80% of its capacity. Production costs for these units are $5.20 per unit, which includes $3.95 of variable costs and $2.95 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:

rev: 09_13_2021_QC_CS-277014

Multiple Choice

• $78,490 increase.

• $12,525 increase.

• $65,965 increase.

• $8,350 decrease.

• $65,965 decrease.