Impact on profits


Costa Company has the capacity of 40,000 units for each year and is currently selling 35,000 for $400 each. Barton Company has approached Costa regarding buying 2,000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 for each unit when compared to the normal packaging cost. Normally, Costa has the variable cost of $280 for each unit. The annual fixed cost of $2,000,000 would be unaffected by special order. What would be the impact on profits if Costa were to accept this special order?

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Mathematics: Impact on profits
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