Stocks Cake Factory Normally Sells Their Specialty Pound Cake for $25

Essay

Stocks Cake Factory normally sells their specialty pound cake for $25. A special order to buy 100 pound cakes for $20 per pound cake was made by an organization hosting a charity event in Philadelphia. The variable cost per cake is $12 and the fixed cost per cake is $3. Assuming Stocks Cake Factory has sufficient excess capacity to fill the special order, determine the differential income or loss per cake from selling the pound cakes if Stocks were to accept this special order.