Termus Industries is operating at 85% of its manufacturing capacity of 50,000 product units per year. A customer has offered to buy an additional 4,000 units at $25 each and sell them outside the country so as not to compete with Termus. The following data are available:
- Costs at 85% Capacity. Per Unit. Total
- Direct materials $10.00 $425,000
- Direct labor 8.00 340,000
- Overhead (fixed and variable) 13.00 552.500
- Totals $31.00 $1,317,500
In producing 4,000 additional units, fixed overhead costs would remain at their current level but incremental variable overhead costs of $4 per unit would be incurred. What is the effect on income if Termus accepts this order?