Eakins Corporation Has Just Developed a New Product

Multiple Choice

Eakins Corporation has just developed a new product.At an expected sales level of 60, 000 units per year, the company anticipates that the following costs will be incurred: Eakins Corporation uses the absorption costing approach to cost-plus pricing as described in the text. Assume that after introducing the new product, the company finds that it has excess capacity.A foreign dealer has offered to purchase 2, 000 units at a special price of $36 per unit.This sale would not disturb regular business.If the special price is accepted on the 2, 000 units, the company's overall net income for the year should:

A) decrease by $24, 000
B) increase by $20, 000
C) increase by $8, 000
D) increase by $32, 000