undefined

Jaws Inc. currently sells 40,000 dental tools to its regular customers but it has a capacity to produce 50,000 tools. Its product sells for $30 per tool and the variable costs incurred are as follows on a per tool basis: Direct materials Direct labour Sales commission $7 $6 $1 A customer has proposed a special order to purchase 10,000 tools at a lower selling price. If Jaws accepts the order, the company will not have to pay its sales personnel their sales commissions. However, the company will incur a shipping cost of $3 per tool. If Jaws accepts the order at a special price of $20 per tool, how would operating income be affected? increase by $40,000 decrease by $30,000 Operating income is not affected decrease by $120,000 increase by $50,000