Flamingos to Go is a service company owned by Irvin Vonnet that will "plant" plastic flamingos on a special day in people's yards to help celebrate and advertise birthdays, births, anniversaries, and other important milestones. The average delivery is priced at $75. The costs of providing 775 deliveries in the past year were:
Direct labor ...............................................................................$13,950
Variable overhead ..........................................................................9,300
Fixed overhead (advertising costs, phone service, insurance) ......................17,000
Total cost .................................................................................$40,250
At the start of the current year, Irv received a phone call from the local Rotary club. The club would like to contract with Flamingos to Go to have flamingos delivered to the yards of each of its members in the upcoming year; this contract would provide an additional 130 deliveries for Flamingos to Go. However, the club wants a special price since it is ordering a large number of deliveries; it has said it would like a price of $57 per delivery. Flamingos to Go can make up to 1,000 deliveries per year without incurring additional fixed costs.
Required
What will be the affect on profit if Irv accepts the special order?