Caleb’s Cookstoves currently manufactures 50,000 cookstoves a year, even though they have the ca

Caleb's Cookstoves currently manufactures 50,000 cookstoves a year, even though they have the capacity to make 75,000 at no additional fixed cost. Abraham's Army Supply has come to Caleb's to see if they would specially make 20,000 cookstoves. Abraham's is willing to pay $75 for each cookstove. Current costs for manufacturing a cookstove are: Direct materials $20 Direct labor

22 Variable overhead 12 Fixed overhead 26 Total $80

What will be the effect on Caleb's Cookstoves net income if they produce the cookstoves for Abraham's?

Select one:

a. $100,000 loss

b. $100,000 income

c. $420,000 loss

d. $420,000 income