Question
Culver Manufacturing has an annual capacity of 84,000 units per year. Currently, the company is making and selling 77,500 units a year. The normal sales
Culver Manufacturing has an annual capacity of 84,000 units per year. Currently, the company is making and selling 77,500 units a year. The normal sales price is $105 per unit, variable costs are $75 per unit, and total fixed expenses are $2,000,000. An out-of-state distributor has offered to buy 10,500 units at $90 per unit. Culver's cost structure should not change as a result of this special order. By how much will Culver's income change if the company accepts this order?
Culvers operating income will _______(increase or decrease) by $______(enter a dollar amount) if it accepts the special order.
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