Nebraska Company Produces and Sells 20,000 Units at $20 Per

Multiple Choice

Nebraska Company produces and sells 20,000 units at $20 per unit.Nebraska Company's product cost is calculated as follows: $$\begin{array} { l l } \text { Variable-unit-based costs } & \$ 8 \text { per unit } \\\text { Fixed costs } & \$ 2 \text { per unit } \\\text { Set-up costs } & \$ 3 \text { per unit } \\& \$ 13 \text { per unit }\end{array}$$ A total of 500 set-ups at a cost of $120 per set-up are required to produce the 20,000 units.Nebraska Company has received a special order to sell 5,000 units at $10 per unit.Nebraska Company has excess capacity available, but these 5,000 would require 60 set-ups.If Nebraska Company accepts the special order, Nebraska Company's net income will _____.

A) decrease by $5,000
B) increase by $20,000
C) increase by $5,000
D) increase by $2,800