Relay Corporation Manufactures Batons

Multiple Choice

Relay Corporation manufactures batons.Relay can manufacture 300,000 batons a year at a variable cost of $750,000 and a fixed cost of $450,000.Based on Relay's predictions for next year,240,000 batons will be sold at the regular price of $5.00 each.In addition,a special order was placed for 60,000 batons to be sold at a 40% discount off the regular price.Total fixed costs would be unaffected by this order.By what amount would the company's net operating income be increased or decreased as a result of the special order?

A) $30,000 increase.
B) $36,000 increase.
C) $60,000 decrease.
D) $180,000 increase.