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Caf Tropical is a local restaurant specializing in tropical cuisine. Among its various Hawaiian-themed menu...

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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-MeSmoothie" 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 specialorder?
Increase of $75
Increase of $15
Increase of $25
Decrease of $15
Decrease of $20
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