Ratzlaff Company has a current production level of 20,000 units per month. Unit costs at this level are:
Direct materials $0.25
Direct labor $0.40
Variable overhead 0.15
Fixed overhead 0.20
Marketing – fixed 0.20
Marketing/distribution – variable 0.40
Current monthly sales are 18,000 units. Jim Company has contacted Ratzlaff Company about purchasing 1,500 units at $2.00 each. Current sales would NOT be affected by the one-time-only special order, and variable marketing/distribution costs would NOT be incurred on the special order. What is Ratzlaff Company's change in operating profits if the special order is accepted?
Select one:
a. $1,800 increase in operating profits
b. $400 increase in operating profits
c. $1,800 decrease in operating profits
d. $400 decrease in operating profits
e. The correct answer is not available.