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Question 1: This month Ashford Company is planning on selling 3,000 units of product A for $10.00 per unit to regular customers. Variable costs to produce product A are $4.00 per unit for materials, $1.5 per unit for labor, and $1.00 per unit for variable overhead. For delivery this same month, a chain store placed a special order for 2,000 units of product A, and offered to pay $8.00 per unit. Ashford has the capacity to produce 5,000 units per month. The differential profit/loss associated with Ashford accepting the order is:
Option a. $4,000 loss
Option b. $16,000 profit
Option c. $13,500 profit
Option d. $ 3,000 profit
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