At A & B Electronics, it costs $98 per unit ($68 variable and $30 fixed) to make a headphone that normally sells for $145. A foreign wholesaler offers to buy 1,000 units at $100 each. A & B Electronics will incur special shipping costs of $4 per unit. Assuming that A & B Electronics has excess operating capacity, indicate the net income (loss) A&B Electronics has excess operating capacity, indicate the net income (loss) A&B Electronics would realize by accepting the special order.

Hint: Fixed costs are not avoidable whether the special order is accepted or rejected. Therefore, they will not affect the company's net income.

Reject or Accept

	Reject order	accept order	net income increase (decrease)
revenues	$	$	$
variable manufacturing cost	$	$	$
shipping cost	$	$	$
net income / (loss)	$	$	$