What would be the impact on profits

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Reference no: EM13263238

Sweet Treats Company has a capacity of 40,000 units per year and is currently selling 35,000 for $400 each. Lucky Company has approached Sweet Treats about buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Sweet Treats $20 per unit when compared to the normal packaging cost. Normally, Sweet Treats 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 Sweet Treats were to accept this special order?

A.
Profits would increase $40,000.
B.
Profits would increase $60,000.
C.
Profits would decrease $200,000.
D.
Profits would increase $80,000

Reference no: EM13263238

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