Smith Manufacturers Inc. is approached by a potential new customer to fulfill a one-time-only special order. The company produces 39,000 units for regular customers and the factory has a capacity of 40,000 units. The following per unit data apply for sales to regular customers:

Variable costs:

Direct materials $130

Direct labor 60

Manufacturing support 105

Marketing costs 95

Fixed costs:

Manufacturing support 175

Marketing costs 65

Total costs 630

Markup (50%) 315

Targeted selling price $945

Should Smith accept the special order if the new customer offers to pay $380 for 800 units?

		No, because the special order will decrease operating income by $10,000
		Yes, because the special order will increase operating income by $10,000
		No, because the special order will decrease operating income by $8,000
		Yes, because the special order will increase operating income by $8,000