Hardy Fibre is the creator of Y-Go, a technology that weaves silver into fabrics to kill bacteria and odour on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,060,000 Y-Go undergarments each year. The per-unit and total costs for the undergarment are as follows:

Hardy Fibre is the creator of Y-Go, a technology that weaves silver into fabrics to kill bacteria and odour on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,060,000 Y-Go undergarments each year. The per-unit and total costs for the undergarment are as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Total Per Undergarment $1.80 1.05 0.80 1.70 0.35 $5.70 Total $1,908,000 1,113,000 848,000 1,802,000 371,000 $6,042,000 The Canadian Armed Forces (CAF) has approached Hardy Fibre and expressed an interest in purchasing 205,500 Y-Go undergarments for soldiers stationed in extremely warm climates. The CAF would pay the unit cost for direct materials, direct labour, and variable manufacturing overhead costs. In addition, the CAF has agreed to pay an additional $1 per undergarment to cover all other costs and provide a profit. Presently, Hardy Fibre is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Hardy Fibre accepts the CAF's offer, it will not incur any variable selling expenses for this order. (a) Using incremental analysis, determine whether Hardy Fibre should accept the CAF's offer. Incremental revenue $ Incremental cost: Variable cost Incremental income $ Hardy Fiber should the Canadian forces' offer