Lakeside Inc. produces a product that currently sells for $68.00 per unit. Current production costs per unit include direct materials, $25; direct labor, $27; variable overhead, $12.50; and fixed overhead, $12.50. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit. Lakeside has received an offer from a nonprofit organization to buy 9,500 units at $66.50 per unit. Lakeside currently has unused production capacity.

Required: a. Calculate the effect on Lakeside's operating income of accepting the order from the nonprofit organization.