Gundy Company Manufactures a Product with the Following Costs Per

Multiple Choice

Gundy Company manufactures a product with the following costs per unit at the expected production of 30,000 units: $\begin{array}{lr}\text { Direct materials } & \$ 4 \\\text { Direct labour } & 12 \\\text { Variable manufacturing overhead } & 6 \\\text { Fixed manufacturing overhead } & 8\end{array}$ The company has the capacity to produce 30,000 units.The product regularly sells for $40.A wholesaler has offered to pay $32 a unit for 2,000 units. Suppose the firm chooses to accept the special order and reject some regular sales.What would be the effect on Gundy's operating income?

A) $0
B) a $4,000 increase
C) a $16,000 decrease
D) a $20,000 increase