Question

Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 2,000 units at $65 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows.

a. Income would decrease by $20,000.
b. Income would increase by $20,000.
c. Income would increase by $140,000.
d. Income would increase by $40,000.

Answer 1

I would say C because i got 130,000

Explanation:

Unit Variable Cost is $50

Unit Sales Price is $88

Fixed Costs $240 000 (10 000 units)

Opportunity 2000 units at $65

Total Sales = $130,000