Lakeside Inc. produces a product that currently sells for $72.00 per unit. Current production costs per unit include direct materials, $27; direct labor, $29; variable overhead, $13.50; and fixed overhead, $13.50. 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 9,700 units at $70.30 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. _________Increase/Decrease of operating income of $_________

b. Should Lakeside accept this special sales order?

• Yes

• No