Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 16,000 cases of sauce each year but is currently only manufacturing and selling 15,000. The following costs relate to annual operations at 15,000 cases:

	Total Cost
Variable manufacturing cost	$330,000
Fixed manufacturing cost	$57,000
Variable selling and administrative cost	$60,000
Fixed selling and administrative cost	$39,000

Gwinnett normally sells its sauce for $50 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,000 cases of sauce but only if they can get the sauce for $25 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits for the year will:

increase by $625

decrease by $1,000

decrease by $15,000

decrease by $11,000

2.

(Ignore income taxes in this problem.) You have deposited $12,987 in a special account that has a guaranteed rate of return. If you withdraw $3,000 at the end of each year for 5 years, you will completely exhaust the balance in the account. The guaranteed rate of return is closest to:

Click here to viewExhibit 13B-2to determine the appropriate discount factor(s) using tables.

5%6%4%7%