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The Following Information Relates to the Jasmine Company for the Upcoming

Question 63

Multiple Choice

The following information relates to the Jasmine Company for the upcoming year, based on 400,000 units:
 Amount Per Unit Sales $8,000,000$20.00 Cost of goods sold 6,400,00016.00 Gross margin 1,600,0004.00 Operating expenses 600,0001.50 Operating profits $1,000,000$2.50\begin{array}{lrr}&\text { Amount}&\text { Per Unit}\\\text { Sales } & \$ 8,000,000 & \$ 20.00\\\text { Cost of goods sold } & \underline{6,400,000} & \underline{16.00 }\\\text { Gross margin } &1,600,000& 4.00 \\\text { Operating expenses } &\underline{ 600,000 }&\underline{ 1.50} \\\text { Operating profits } & \underline{ \$ 1,000,000} &\underline{ \$2.50}\end{array}

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 Jasmine.
- Fortunately, there will be no additional operating expenses associated with the order and Jasmine has sufficient capacity to handle the order. How much will operating profits increase if Jasmine accepts the special order?


A) $50,000
B) $125,000
C) $200,000
D) $250,000

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