(TCO 5) The following information relates to a product produced by Bayfield

Company:

Direct materials

$50

Direct labor

35

Variable overhead

30

Fixed overhead

40

Unit cost

$155

Fixed selling costs are $1,000,000 per year. Although production capacity is 900,000 units per year, Bayfield expects to produce only 800,000 units next year. The product normally sells for $180 each. A customer has offered to buy 60,000 units for $150 each. Compute the effect on the net income if Bayfield accepts the special order.

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