Answer:
$2,500 Increase
Step-by-step explanation:
Lil Beasty Company
Variable cost per unit ($17 + $1.50) $18.50
Income per unit ($19 – $18.50) $0.50
The total increase in net income ($.50 X 5,000 units) $2,500
Therefore we have increase $2,500 meaning If the offer is accepted with unused capacity, net income will increase by $2,500. The variable cost per unit will be $18.50 ($17 + $1.50); the income per unit is $.50 ($19 – $18.50); and the total increase in net income will be $2,500 ($.50 X 5,000 units)