Commercial Carpets manufactures custom mats. The details on its standard run of a 1 m x 2 m mat is as follows:

Quantity	Unit Selling Price	Unit Variable Cost	Fixed Costs
290	$59	$34	$2,000

A prospective customer has indicated it would purchase 20% more mats than the standard order if the unit price could be reduced by $2. Assuming no changes to the cost structure, should the sales manager accept this order?

Question 8

a.

Yes. Operating income would increase by 20%

b.

No. Total costs would increase by $2,726

c.

Yes. The contribution margin will increase by $754

d.

Yes. Total revenue would increase by 20%