CORRECT ANSWER C. IF JOHNSON ACCEPTED THE SPECIAL ORDER, THE CO...

235.

Correct answer c. If Johnson accepted the special order, the company’s operating income

would increase by $37,500 as shown below.

Special order price

$2.50

Less variable cost*

5.00

Contribution margin

$2.50

Contribution to operating income:

15,000 x $2.50 = $37,500

*Fixed costs and selling costs are not relevant