Special-Order Decision, Alternatives, Relevant Costs

Sequoia Paper Products, Inc., manufactures boxed stationery for sale to specialty shops. Currently, the company is operating at 80 percent of capacity. A chain of drugstores has offered to buy 29,000 boxes of Sequoias blue-bordered thank-you notes as long as the box can be customized with the drugstore chains logo. While the normal selling price is $5.60 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 follows:

Direct materials	$1.75
Direct labor	0.36
Variable overhead	0.06
Fixed overhead	2.25
Total cost per box	$4.42

Fixed overhead is $394,000 per year and will not be affected by the special order. Normally, there is a commission of 7 percent 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 $13,900 for the design and setup of the machinery to stamp the drugstore chains logo on each box.

The operating income would increase by $ ___________