Rosies manufactures silk flowers. ABC Company has approached Rosies with a proposal to buy 2,000 silk flowers for $4.00 each. Regular customers are charged $4.25 for each flower. Rosies has the necessary capacity. The following costs are associated annually with silk flowers with the company's normal production and sales of 10,000 flowers:

Direct material $21,000

Direct labor 13,000

Manufacturing overhead 9,000

Total $43,000

Forty percent of the manufacturing overhead is variable. All fixed overhead is allocated equally to all products produced.

Requirements: Prepare an incremental analysis schedule to demonstrate what amount operating income would increase or decrease as a result of accepting the special order.

Hint: think differences between accepting the order or not.