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It costs Lamar Company $14.70 of variable and $10.40 of fixed costs to produce one bathroom scale which normally sells for $24.90. A foreign wholesaler
It costs Lamar Company $14.70 of variable and $10.40 of fixed costs to produce one bathroom scale which normally sells for $24.90. A foreign wholesaler offers to purchase 1,300 scales at $8.30 each. Lamar will incur special shipping costs of $3.00 per scale if the order is accepted. Lamar has sufficient unused capacity to accommodate the order. If the special order is accepted, what will be the effect on net income?
A. Increase of $6,890
B. Decrease of $12,220
C. Increase of $12,220
D. Decrease of $6,890
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