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The incorporated city of Orillia has asked PPP to make them 10,000 commemorative pottery plates...

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Accounting

The incorporated city of Orillia has asked PPP to make them 10,000 commemorative pottery plates to celebrate their 150th anniversary. These would cost the same as regular PPP plates to make. The price would be $2.50 per plate. The contract would reduce PPP's usual business by 10,000 plates, as the company has no spare capacity PPP is concerned about the reported loss on the mugs they make. It is considering eliminating mugs. If mugs were discontinued, PPP would be able to make and sell an additional 10,000 plates. The effect on operating profit would be
none of the options
an increase of $20,000
an increase of $6,250
a decrease of $12,500
a decrease of $31,250
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