manufactures and sells pens for

$7

each. Cubby Corp. has offered Inscribe, Inc.

$4

per pen for a

onetime

order of

3,600

pens. The total manufacturing cost per pen, using absorption costing, is

$1

per unit and consists of variable costs of

$0.80

per pen and fixed overhead costs of

$0.20

per pen. Assume that Inscribe, Inc. has excess capacity and that the special pricing order would not adversely affect regular sales. What is the change in operating income that would result from accepting the special pricing order?

Question content area bottom

Part 1

A.

decrease of $11,520

B.

increase of $11,520

C.

increase of $10,800

D.

decrease of $10,800