Salish Industries Manufactures a Product with the Following Costs Per

Multiple Choice

Salish Industries manufactures a product with the following costs per unit at the expected production of 60,000 units: $\begin{array}{lr}\text { Direct materials } & £ 8 \\\text { Direct labour } & 15 \\\text { Variable manufacturing overhead } & 10 \\\text { Fixed manufacturing overhead } & 12\end{array}$ The company has the capacity to produce 70,000 units. The product regularly sells for £60. A wholesaler has offered to pay £55 each for 5,000 units. If the special order is accepted, the effect on operating income would be a

A) £42,000 decrease.
B) £67,000 increase.
C) £110,000 increase.
D) £182,000 decrease.