QUESTION:

Daniel Inc. produces Model XD42. A new customer has offered to purchase 5,000 units for $4.50 each. This customer would sell Model XD42 under a different name in foreign markets so Daniel Inc.'s existing sales are not expected to be affected.

Daniel Inc. has capacity to sell 65,000 units and they currently produce and sell 55,000 units. The normal sales price for Module XD42 is $9 each.

Unit information for the company's normal level of production is as follows:

Direct materials	$0.48
Direct labour	$1.55
Variable overhead	$0.90
Fixed overhead	$2.10
Total	$5.03

Using the above information answer the following questions.

Should Daniel Inc. accept or reject the special order?

Enter the letter A for accept.

Enter the letter B for reject.

Would operating income increase or decrease if the special order was accepted.

Enter the letter A for increase.

Enter the letter B for decrease.

By how much will operating income increase or decrease by if the order was accepted?

Enter your answer as a positive number even if operating income would decrease.