Lattimer Company had the following results of operations for the past year: Sales (15,000 units at $12) $180,000 Variable manufacturing costs$97,500 Fixed manufacturing costs 21,000 Selling and administrative expenses (all fixed) 36,000 (154,500) Operating income $25,500 A foreign company offers to buy 5,000 units at $7.50 per unit. In addition to existing costs, selling these units would add a $0.25 selling cost for export fees. Lattimer's annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a:
A. $2,000 loss.
B. $3,250 loss.
C. $3,750 profit.
D. $8,250 loss.
E. $5,000 profit.
Answer: C
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