The following information relates to the Jax Company for the upcoming year. The cost of goods sold includes $2,400,000 of fixed manufacturing overhead; the operating expenses include $200,000 of fixed marketing expenses.A special order offering to buy 50,000 units for $15.00 per unit has been made to Jax.Fortunately,there will be no additional operating expenses associated with the order; however,Jax is operating at full capacity.How much will operating profits increase if Jax accepts the special order?
A)$50,000
B)$125,000
C)$200,000
D)$250,000
E)Operating profits will not increase as a result of accepting the special order.

Question

Quizplus · Accepted Answer

Since Jax is operating at full capacity, accepting the special order would require sacrificing regular sales, which means the contribution margin from regular sales would be lost. Therefore, operating profits will not increase.

The Following Information Relates to the Jax Company for the Upcoming