Kansas Company Produces and Sells 20,000 Units at $22 Per

Multiple Choice

Kansas Company produces and sells 20,000 units at $22 per unit.Kansas Company's product cost is calculated as follows: $$\begin{array} { l l } \text { Variable-unit-based costs } & \$ 10 \text { per unit } \\\text { Fixed costs } & \$ 2 \text { per unit } \\\text { Set-up costs } & \$ 3 \text { per unit } \\& \$ 15 \text { per unit }\end{array}$$ A total of 500 set-ups at a cost of $120 per set-up are required to produce the 20,000 units.Kansas Company has received a special order to sell 5,000 units at $12 per unit.Kansas Company has excess capacity available, but these 5,000 would require 60 set-ups.If Kansas Company accepts the special order, Kansas Company's cost will increase by _____.

A) $7,200
B) $40,000
C) $57,200
D) $65,000