Mobile Concepts makes special equipment used in cell towers. Each unit sells for $420 Mobile Concepts uses just-in-time inventory procedures; it produces and sells 12,000 units per year. It has provided the following income statement data:

Traditional Format Contribution Margin Format

Sales Revenue $5,040,000 Sales Revenue $5,040,000

Costs of goods sold 3,000,000 Variable costs:

Gross profit 2,040,000 Manufacturing 1,000,000

Selling & admin. Expenses 750,000 Selling & admin 500,000

Contribution margin 3,540,000

Fixed Costs:

Manufacturing 2,000,000

Selling & admin 250,000

Operating income $1,290,000 Operating Income $1,290,000

A foreign company has offered to buy 100 units for a reduced sales price of $300 per unit. The marketing manager says the sale will have no negative impact on the company's regular sales. The sales manager says that this sale will not require any variable selling and administrative costs. The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs. If Mobile Concepts accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A. Operating income will decrease by $30,000.

B. Operating income will decrease by $21,667.

C. Operating income will increase by $30,000.

D. Operating income will increase by $21,667.