Company change in profits

Reference no: EM13152178

Missouri company has a current production capacity level of 200,000 units per month. At this level of production, variable costs are $0.50 per unit and fixed costs are $0.50 per unit. Current monthly sales are 173,000 units. Gates company has contacted Missouri company about purchasing 20,000 units at $1.00 each. Current sales would not be affected by the special order and no additional fixed costs would be incurred on the special order. Missouri company's change in profits if the order is accepted will be a ______

a. $20,000 increase

b. $20,000 decrease

c. $10,000 increase

d. $10,000 decrease

Reference no: EM13152178

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