Exercise 8-6

Sarasota Company is a leading manufacturer of sunglasses. One of Sarasotas products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Sarasota about purchasing 19,900 pairs of these sunglasses. Sarasotas unit manufacturing cost, based on a full capacity of 113,000 units, is as follows:

Direct materials	$7
Direct labor	5
Manufacturing overhead (60% fixed)	20
Total manufacturing costs	$32

Sarasota also incurs selling and administrative expenses of $78,170 plus $2 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Sarasotas normal price for these sunglasses is $41 per pair. The sporting goods store has offered to pay $38 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Sarasotas income if the special order were accepted?

Sarasotas income will ___________ (decrease or increase) by $_____________