Sequoia Paper Products, Inc., manufactures boxed stationary for sale to specialty shops. Currently, the company is operating at 90 percent of capacity. A chain of drugstores has offered to buy 30,000 boxes of Sequoia's thank-you notes as long as the box can be customized with the drugstore chain's logo. While the normal selling price is $6 per box, the chain has offered just $3.10 per box. Sequoia can accommodate the special order without affecting current sales. Unit cost information for a box of thank-you notes is below. Direct materials: $1.87 0.33 0.08 2.10 $4.38 Direct labor Variable overhead Fixed overhead Total cost per box Fixed overhead is $420,000 per year and will not be affected by the special order. Normally, there is a commission of 5% of price. This will not be paid on the special order since the drugstore chain is dealing directly with the company. The special order will require additional fixed costs of $14,600 for the design and setup of the machinery to stamp the drugstore chain's logo on each box. What is the effect on operating income for the company as a whole if Sequoia chooses to accept the special order? 1