The following information relates to a product produced by Bayfield Company:
Direct materials |
$70 |
Direct labor |
40 |
Variable overhead |
45 |
Fixed overhead |
50 |
Unit cost |
$205 |
Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $170 each. A customer has offered to buy 60,000 units for $160 each. Compute the effect on the net income if Bayfield accepts the special order.