Use the following information for the next 2 questions.

James & Co., which has excess capacity, received a special order for 4,000 units at a price of $18 per unit.Currently, production and sales are budgeted for 25,000 units without considering the special order.

Budget information for the current year is presented below:

Sales$ 900,000

Less: Cost of goods sold600,000

Gross margin$ 300,000

Less: Operating expenses200,000

Net income$ 100,000

James & Co. estimates that 70% of Cost of goods sold is variable manufacturing costs and 60% of Operating expenses are fixed costs.

1.If the order is accepted, net income will:

a.Increase

b.Decrease

c.Remain the same

d.More information is need to answer the question

e.None of the above

2.Refer to the previous question. By what amount, if any, will net income change? (If net income will not change or more information is needed to answer the previous questions, state your answer as "N/A.")