Sales for the Western Division of a small company have been off for several years making the plant far under its capacity of only product, MX17. This year the company plans to produce and sell 180,000 units of MX17 at a $45.00 per unit sales price. The per unit cost to produce and sell the product is comprised of $8.00 in fixed costs per unit and $18.00 in variable costs per unit. The company received a special order from a foreign customer for 5,000 of the MX17s at a price of $30.00. This order can be completed without increasing the fixed costs of the operation but special packaging will be required that will increase the unit cost by $0.50. In addition, the shipping costs will increase by $1.50 per unit.

1. What is the financial impact of accepting the special order?

2. In addition, in your answer make sure to indicate whether the financial impact would be an increase or decrease in operating income.