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Question - Dunder Mifflin sells all its paper at the following prices, with the following costs:
Sale price per unit: $150
Variable costs per unit:
Manufacturing: $90
Marketing: $25
Fixed Costs:
Manufacturing: $1,000,000
Marketing: $80,000
Required - How would operating income be affected if Dunder Mifflin accepts a special order of 5,000 units at a price of $130? Assume Dunder Mifflin has the capacity to produce the additional units; it still markets the new product; and its fixed costs will not change with the acceptance of the order.
a. Increase $75,000
b. Increase $750,000
c. Increase $525,000
d. Decrease $100,000
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