Plairtrack Company manufactures lamps. Sparkit, a large retail merchandiser, wants to buy 250,000 lamps from Plairtrack Company for $11 each.

Plairtrack Company normally sells 420,000 lamps a year at $16 each; its production capacity is a total of 600,000 units a year.

Below is the production cost information for the lamps:

Variable production costs per unit $6

Fixed manufacturing overhead per unit $7

Total production cost per unit $13

Total fixed manufacturing overhead costs will not change regardless of whether the special order is accepted.

Sparkit has indicated that the company is not interested in signing a contract for fewer than 250,000 lamps.

By how much will Plairtrack Companys net income change if this special order is accepted?

It will increase by $550,000.

It will decrease by $550,000.

It will increase by $1,250,000.

It will decrease by $1,250,000.