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Caf Tropical is a local restaurant specializing in tropical cuisine. Among its various ...

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Accounting

Caf Tropical is a local restaurant specializing in tropical cuisine. Among its various
Hawaiian-themed menu item is the popular "Surprise-Me-Smoothie." The smoothies
are sold to regular customers at a price of $6.50 per smoothie. The caf typically
sells 40 smoothies during breakfast. At this quantity, the smoothies cost the caf
$2.50 each to make - $2.00 of the cost is variable and $0.50 of the cost is fixed. The
restaurant is currently operating at 80% capacity during the breakfast hour. The only
menu item offered during breakfast is the smoothie.
The caf is considering accepting a special catering order for their "Surprise-Me-
Smoothie" from the Jazzagals before they depart for their a cappella competition.
The Jazzagals will need the smoothies ready for breakfast, one of the caf's busiest
times. The Jazzagals need 30 smoothies and would like a discounted price of $4.50
per smoothie because of the quantity.
What will be the effect on operating income if Caf Tropical accepts the special-
order?
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