Faux Trees Company Produces Artificial Christmas Trees

Multiple Choice

Faux Trees Company produces artificial Christmas trees. A local shopping mall recently made a special order offer; the shopping mall would like to purchase 240 extra-large white trees. Faux Trees Company is currently producing and selling 20,000 trees; the company has the excess capacity to handle this special order. The shopping mall has offered to pay $140 for each tree. An accountant at Faux Trees Company provides an estimate of the unit product cost as follows: This special order would require an investment of $9000 for the molds required for the extra-large trees. These molds would have no other purpose and would have no salvage value. The special order trees would also have an additional variable cost of $5.59 per unit associated with having a white tree. This special order would not have any effect on the company's other sales. If the special order is accepted, the company's operating income would increase (decrease) by

A) $13,800.00 decrease.
B) $17,980.80 decrease.
C) $8980.80 increase.
D) $17,980.80 increase.