Bluebird Mfg

Multiple Choice

Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost.
-If Bluebird accepts this additional business, the effect on net income will be:

A) $45,000 increase.
B) $7,500 decrease.
C) $11,250 increase.
D) $33,750 increase.
E) $33,750 decrease.