Omark Corporation currently manufactures a subassembly for its main product. The variable costs per unit are $48, in addition to a $6 charge based on estimated selling expenses.

RCorp

has contacted Omark with an offer to sell them 5,000 of the subassemblies for $44.00 each. Omark will eliminate $50,000 of fixed overhead if it accepts the proposal.

What is increase or decrease in profit from accepting the offer?

Question content area bottom

Part 1

A.

$170,000 increase

B.

$50,000 increase

C.

$70,000 increase

D.

$50,000 decrease

E.

$100,000 increase