Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows:AmountPer UnitSales ..$3,000,000$150.00Manufacturing cost of goods sold .1,000,00050.00Gross profit…$2,000,000$100.00Selling expenses800,00040.00Net operating income .$1,200,000$ 60.00Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses.A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts thespecial order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as aresult of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)40000increase
Deuce Sporting Good
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