Micro Enterprises Has the Capacity to Produce 10,000 Widgets

Multiple Choice

Micro Enterprises has the capacity to produce 10,000 widgets a month,and currently makes and sells 9,000 widgets a month.Widgets normally sell for $6 each,and cost an average of $5 to make,including fixed costs.The monthly fixed costs are $18,000.Coyote has offered to buy 1,500 widgets (all or nothing) for $4 each. The accountant has determined that the excess production (beyond capacity) can be accommodated in the short term by incurring an incremental (fixed) cost of $800.
Should Coyote's offer be accepted?

A) No,because it will lose $1 per unit
B) No,because the opportunity costs are less than the gains
C) Yes,because the contribution from the sale exceeds the incremental costs
D) Yes,because it makes $1 per unit in the short run
E) Unable to determine