Business Support, Inc. prepares tax returns for small businesses. The cost of preparing 800 tax returns in the prior year was:

Direct labor $400,000

Variable overhead 296,000

Fixed overhead 250,000

Total cost $946,000

At the start of the current year, the company received an offer from Big Jim's Small Business Gurus, a firm that provides bundled services to businesses. Big Jim's wants Business Support to prepare tax returns for its 150 small business clients. Business Support has the capacity to prepare up to 1,000 returns in a given year, so this special order would not take away revenue from any of Business Support's current clients. Big Jim's is willing to pay $880 per tax return. What will be the effect on Business Support's profit if it agrees to prepare returns for the 150 clients?

Accept, because profit will increase by $1,500.

Don't accept, because profit will decline by $45,375.

Accept, because profit will increase by $132,000.

Don't accept, because profit will be $1,500 less.