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Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of

Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:

Direct materials $60.4
Direct labor $18.1
Variable manufacturing overhead $2.5
Fixed manufacturing overhead $22.1
Variable selling & administrative expense $3.0
Fixed selling & administrative expense $17.1

The normal selling price of the product is $130.1 per unit. An order has been received from an overseas customer for 1,950 units to be delivered this month at a special discounted price. This order would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.4 less per unit on this order than on normal sales. Direct labor is a variable cost in this company. Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $120.2 per unit. By how much would this special order increase (decrease) the company's net operating income for the month?

$(9,730)

$40,670

$75,270

$(2,270)

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