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1. Walmart Inc. manufactures and sells pens for $9 each. Dollar Tree Stores, Inc. has offered Walmart 4 per pen for a one-time order of
1. Walmart Inc. manufactures and sells pens for $9 each. Dollar Tree Stores, Inc. has offered Walmart 4 per pen for a one-time order of 4500 pens. The total manufacturing cost per pen, using absorption costing, is $1.20 per unit and consists of variable costs of $2.75 per pen and fixed overhead costs of $0.15 per pen. Assume that Walmart has excess capacity and that the special pricing order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special pricing order? (Calculate the dollar amount and indicate if it is an increase or decrease) (Please use parenthesis to indicate a negative number)
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