Variable costs and fixed costs behaviour. TwinkleToes Company manufactures beach ©

sandals and sells them for $22 a pair. Variable manufacturing costs are $9.90 a pair, and indirect fixed manufacturing costs are $3.30 a pair. The company can accept a one-time-only special order of 20,000 pairs of sandals at $13.20 a pair because the extra quantity is within the relevant range of production, so indirect fixed manufacturing costs will not increase due to this special order. Woody will not incur any marketing or other period costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales?

REQUIRED Choose the correct answer.

a. $0

b. $66,000 increase

c. $198,000 increase

d. $264,000 increase.

LO1