Tendulkar Inc., has a plant capacity of 35,000 units per month. Unit costs at capacity are:
Direct materials $1.75
Direct labour $1.50
Variable overhead $1.25
Fixed overhead $1.50
Marketing-fixed $1.80
Current monthly sales are 33000 units at $7.50 each. Tuffers Inc. has contacted Tendulkar Inc. about purchasing 2000 units at $5.50 each. Current sales would not be affected by the special order. If the order is accepted, what is Tendulkar’s change in profit?
Select one:
a.
A decrease of $1,600
b.
A decrease of $1,000
c.
A decrease of $4,000
d.
An increase of $2,000
e.
A decrease of $4,600