Exhibit 7-2 Jake Company Is Considering a Special Order for 5,000 Units

Multiple Choice

Exhibit 7-2
Jake Company is considering a special order for 5,000 units at a price of $60 per unit.Jake's product normally sells for $84 per unit and has variable manufacturing costs of $45 per unit and variable selling costs of $9 per unit.Fixed manufacturing costs are $150,000 and fixed selling and administrative costs are $300,000.Jake has capacity to produce 30,000 units and is currently producing 20,000 units.If the order is accepted,,Jake will incur legal fees of $7,500 in connection with the order,but there will be no variable selling costs on the special order.
-Refer to Exhibit 7-2.What amount of additional profit or loss will be incurred if the order is accepted?

A) $300,000
B) $67,500
C) ($127,500)
D) ($22,500)
E) None of the answer choices is correct.