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It costs Fortune Company $10 of variable and $4 of fixed costs to produce one bathroom scale, which normally sells for $28. A foreign wholesaler offers to purchase 1,000 scales at $12 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income?

a. $1,000 increase

b. $1,000 decrease

c. $2,000 decrease

d. $12,000 increase

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M968986

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