Aerotoy Company Makes Toy Airplanes No Variable Marketing Costs Would Be Incurred

Multiple Choice

Aerotoy Company makes toy airplanes.One plane is an excellent replica of a 737,which sells for $5.Vacation Airlines wants to purchase 12,000 planes at $1.75 each to give to children who are flying unaccompanied.Costs per plane are as follows: $\begin{array}{lr}\text { Direct materials } & \$ 1.00 \\\text { Direct labour } & 0.50 \\\text { Variable overhead } & 0.10 \\\text { Fixed overhead } & 0.90\end{array}$ No variable marketing costs would be incurred.The company is operating significantly below the maximum productive capacity.No fixed costs are avoidable.However,Vacation Airlines wants its own logo and colours on the planes.The cost of the decals is $0.01 per plane,and a special machine costing $1,500 would be required to affix the decals.After the order is complete,the machine would be scrapped.Which of the following represents the solution?

A) Do not accept the order,because income will decrease by $1,500.
B) Do not accept the order,because income will decrease by $180.
C) Accept the order,because income will increase by $180.
D) Accept the order,because income will increase by $300.