Answer:
The special order should be accepted, as it will increase Net income by $38,000.
Explanation:
                             Differential Analysis
                                    Reject     Accept     Net income Increase/(Decrease)
Revenues                       0        $118,750                 $118,750  
Cost-manufacturing       0        $76,000                -$76,000  
Shipping                         0        $4,750                   <u>-$4,750</u>
Net income                    0        $38,000                 <u>$38,000</u>
The special order should be accepted, as it will increase Net income by $38,000.
<u>Workings</u>
Accept Order Revenue = 4,750 *$25 = $118,750
Accept Order Cost-manufacturing = 4,750 * $16 = $76,000
Accept Order Shipping = 4,750 * $1 = $4,750