If the offer is accepted with unused capacity, fixed costs will not increase. The amount of the sales price above variable costs will contribute to covering fixed costs. The firm will have $22400 [4000 units X ($23.6  $18)] more than if it does not accept the offer. Thus, net income will increase by $22400.  

increase $16000. 

increase $22400. 

decrease $11200. 

increase $11200. 
The question can be solved as follows :
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