Cinotti Bread Depot bakes and sells each bagel for $1.25. The cost of producing 600,000 bagels in the prior year was:
Revenues $750,000
Direct materials 330,000
Direct labor 66,000
Manufacturing overhead - fixed 132,000
Manufacturing overhead - variable 84,000
At the start of the current year, Cinotti received a special order for 15,000 bagels to be sold for $1.10 per bagel. The company estimates it will incur an additional $700 in total fixed costs in order to lease a special machine needed to bake the bagels in the customer's logo shape. Also, this order will not affect any of its other operations. Should the company accept the special order?
A. No, profit will decrease by $2,950
B. No, profit will decrease by $2,250
C. Yes, profit will increase by $3,800
D. Yes, profit will increase by $500