Blossom Forge manufactures saddles for show horses. The company has received a special order for 295 saddles for an international competition. Each of these saddles would include the specialized logo of the competition. Last year Blossom produced 715 saddles, and the company has the capacity to produce 1010 saddles per year. Blossom's saddles normally sell for $655 each, but the special offer is for $184375 ($625 per saddle). The controller has provided information to management that estimates the variable cost per saddle is $440; fixed manufacturing overhead is $65/saddle. Of the fixed costs assigned to this special order, $16000 is for the specialized logos, the remainder is attributable to costs that will be incurred regardless of whether the special order is produced. What is the operating income generated by the special order?

 

a. $19400
 

b. $35400
 

c. $54575
 

d. $38575