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Michelle Inc makes

Accounting

Michelle Inc makes... ink. Michelle normally sells black ink cartridges for $5 each. These cartridges have a variable cost of $2 and an average fixed cost of $1 per unit based on the 50,000 units Michelle normally makes. Shawn approaches Michelle with an offer to purchase 5,000 blue ink cartridges for $4 each. Each cartridge requires an additional $.10 in material (variable cost), and Michelle will have to spend $1,000 in total cleaning the machines that produces the ink cartridges in order to fulfill the order.

1. How much will Michelle's income change (use a negative number if it decreases).

2.What price is required for Michelle to break-even on the special order (make no profit)?

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