If Mangrove were to accept contractor A'soffer, would Mangrove's operating income increase or decrease?

17 Required information Mangrove Industries manufactures pharmaceutical products in two departments: mixing and tablet-making. Additional monthly information about operations in the two departments is presented below: Part 1 of6 - Mixing Tablet-Making Capacity per hour 150 grams 200 tablets 05 Monthly capacrty (2,000 machine-hours available in each 300,000 grams 400900 tablets points epam'l'iel'it) Monthly production 200,000 grams 390,000 tablets Monthly fixed operating costs $16,000 $39,000 Fixed operating cost per gram / tablet $0.08 $0.10 Each month, the mixing department manufactures 200,000 grams of direct materials mixture. All direct material costs are incurred in the mixing department and the cost of direct materials used to make the direct materials mixture is $156,000 per month. Direct materials costs are the only variable cost in the entire manufacturing operation. The mixing department manufactures 200,000 grams of direct material mixture (enough to make 400,000 tablets) because the tablet-making department has only enough capacity to manufacture 400,000 tablets. Each tablet contains 0.5 grams of direct material mixture. The direct materials mixture is perishable and therefore cannot be stored as inventory. The tablet-making department manufactures only 390,000 each month from the 200,000 grams received from the mixing department because 2.5% of the direct materials mixture is lost in the tablet-making process. All costs incurred in the tablet-making department are fixed costs. Each tablet sells for $1.00. The statement and question listed below refers only to the preceding data. The questions presented relating to contractor A are completely separate and unrelated to the questions related to contractor B. The questions relating to Mangrove's engineers' quality-improvement idea is completely separate and unrelated to the questions relating to contractor A and contractor B. Contractor A makes the following offer: If Mangrove will supply contractor A with 10,000 grams ofdirect materials mixture, contractor A will manufacture 19,500 tablets for Mangrove. This allows for the normal 25% shrinkage during the tablet-making process. Contractor A will charge Mangrove $0.12 per tablet manufactured. If Mangrove were to accept contractor A's offer, would Mangrove's operating income increase or decrease