Blended Products manufacturest-shirts. It has the following costs when its production level is 95,000 units(t-shirts):

What will happen to Blended's operating income if it accepts this specialorder?

Total Order

Incremental Analysis of Special Sales Order Decision

Per Unit

(9,500 units)

Revenue from special order

Less variable expense associated with the order:

Direct materials

Direct labor

Variable manufacturing overhead

Contribution margin

Less: Additional fixed expenses associated with the order

Increase (decrease) in operating income from the special order

Total costs for 95,000 units

Direct materials

$

342,000

Direct labor

42,750

Variable manufacturing overhead

66,500

Fixed manufacturing overhead

150,000

Total manufacturing costs

$

601,250

Additional Info:

Thecompany's relevant range extends to 109,500 units. Blended has received a special order for 9,500 t-shirts at a special price of $45,125 for the entire order. The special ordert-shirt would use a fabric that is less expensive than the standard fabric used by Blended, which would allow Blended to save $0.45 pert-shirt in direct materials when manufacturing this special order. Blended has the excess capacity to manufacture this special order. Its total fixed costs will not be impacted by the special order.