XYZ. ordinarily sells product X for $40. The cost to produce a unit of product X includes $20 variable production cost and $8 fixed production cost. A customer has requested a special order for 4,000 units of product X for $30 each. The special order requires modifications made to product X. The modifications would increase the variable production cost by $4 per unit and require the purchase of a special machine for $20,000 that would have no salvage value.

The special order would not affect XYZ other fixed production cost or other sales. XYZ has enough spare capacity to fulfill the special order. What is the financial advantage (disadvantage) for XYZ to accept this special order?

Multiple Choice

• $4,000

• $24,000

• ($24,000)

• ($4,000)