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

1 9 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 3 of 6 Mixing Tablet-Making Capacity per hour 150 grams 200 tablets 05 (Monthly capacrty (2,000 machine-hours available In each 300,000 grams 400000 tablets points apartment) 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 B offers to prepare 20,000 grams of the direct materials mixture using direct materials that Mangrove would supply, Whether or not Mangrove accepts Contractor B's offer, Mangrove will continue manufacturing 200,000 grams ofdirect material mixture each month. Contractor B will charge $0.07 per gram of the direct material mixture. If Mangrove were to accept contractor B's offer, would Mangrove's operating income increase or decrease