Gardner Sail Makers manufactures sails for sailboats. The company has the capacity to produce

36,000

sails per year and is currently producing and selling

30,000

sails per year. The following information relates to current production:

Sales price per unit	$180
Variable costs per unit:
Manufacturing	$60
Selling and administrative	$20
Total fixed costs:
Manufacturing	$675,000
Selling and administrative	$250,000

Assume that a special pricing order is accepted for

5,500

sails at a sales price of

$140

per unit. This special order requires both variable manufacturing and variable selling and administrative costs, as well as incremental fixed costs of

$400,000.

What will be the impact on operating income?

A.

Operating income increases by

$330,000.

B.

Operating income increases by

$70,000.

C.

Operating income decreases by

$70,000.

D.

Operating income decreases by

$330,000.