Problem
A firm has received a special order for 45,000 units of product X at $20 per unit. The firm iscurrently operating at practical capacity of 600,000 units. To meet this order, new equipment at acost of $200,000 would have to be purchased, and this equipment would have to be scrapped afterthe order is filled, with no salvage value. The frm currently sells product X for $50 per unit, hasvariable costs of $15, and fixed costs of $600,000. What is the additional profit (loss) that the firmexpects if it accepts the order?