Assume that Iowa Corp expects to sell 27,000 units of Cyclones statues this year. A new customer comes along willing to buy 4,000 Cyclones statues for $300 each. What is the effect on net operating income if the special order is accepted?

Iowa Corp makes two types of statues: Hawkeyes and Cyclones. The company sells Hawkeye statues for $840 each and Cyclone statues for $550 each. The only direct material for the statues is marble, which costs $32 per pound. Iowa Corp has the capacity to produce 30,00o units of each product. Unit costs for the two products at full capacity are as follows: Hawkeye $128 8 53 6 Cyclone Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 102 2 Total cost per unit 375 For both products: 60% of the fixed manufacturing overhead costs are common fixed costs, and 40% of the fixed selling costs are common fixed costs