Darjeeling Co

Essay

Darjeeling Co. produces a single product. Its normal selling price is $32.00 per unit. The variable costs are $21.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. The company has received a request for a special order that would not interfere with normal sales. The order is for 1,500 units and a special price of $19.00 per unit. Darjeeling Co. has the capacity to handle the special order and, for this order, a variable selling cost of $1.00 per unit would be eliminated. If the special order is accepted, what will the effect be on Darjeeling Co.'s income?