Kintectics Ltd Can Manufacture 480,000 Electrical Pumps a Year at a Variable

Kintectics Ltd can manufacture 480,000 electrical pumps a year at a variable cost of $15 per pump and fixed costs of $500,000. Kintectics Ltd budgeted that it can sell 400,000 at $25 each. An additional order of 100,000 was received, but at a discount of 35% from the regular price. If Kintectics Ltd accepts the special order, profit before taxes will:

A) Decrease by $75,000
B) Increase by $75,000
C) Increase by $25,000
D) Some other amount

Correct Answer:

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