Contreras company consists of a capacity of 40000 units per

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Contreras Company has a capacity of 40,000 units per year and is currently selling all 40,000 for $400 each. Buerhle Company has approached Contreras about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Contreras $20 per unit when compared to the normal packaging cost.

Normally, Contreras has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Contreras were to accept this special order?

A. Profits would decrease $200,000

B. Profits would decrease $160,000

C. Profits would increase $60,000

D. Profits would increase more than $60,0000

Reference no: EM13394899

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