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Costa Company has a capacity of 40000 units per year and is currently selling 35000 for $400 each. Barton Company has approached Costa about buying 2000 units for only $300 each.

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Costa Company has a capacity of 40000 units per year and is currently

selling 35000 for $400 each. Barton Company has approached Costa about buying 2000 units for only $300 each. The units would be packaged in bulk, saving Costa $20 per unit when compared to the normal packaging cost. Normally, Costa has a variable cost of $280 per unit. The annual fixed cost of $2,000,000 would be unaffected by the special order. What would be the impact on profits if Costa were to accept this special order?

Profits would increase $40000
Profits would increase $60000
Profits would decrease $200000
Profits would increase $80000

 
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