Suppose Electro Breeze Air Filter Ltd. sells air filters for $3.20 each. Assume that a mail-order company has offered Electro Breeze $36,000 for 20,000 air filters, or $1.80 per filter. The manufacturing cost per unit is $2.15. Suppose Electro Breeze's variable manufacturing cost is $1.45 per air filter. In addition, Electro Breeze would have to buy a special stamping machine that costs $12,000 to mark the customer's logo on the special-order air filters. The machine would be scrapped when the special order is complete.

This sale: times

Will use manufacturing capacity that would otherwise be idle

Will not require any variable non-manufacturing expenses (because no extra marketing costs are incurred with this special order)

Will not affect regular sales

Will not change fixed costs

Would you recommend that

Electro BreezeElectro Breeze

accept the special order under these conditions? Show your analysis.

Complete the following incremental analysis to help you make your recommendation. (Use parentheses or a minus sign to indicate a decrease in operating income.)

Electro Breeze
Incremental Analysis of Special Sales Order
Expected increase in revenues
Expected increase in expenses:
Total expected increase in expenses
Expected increase (decrease) in operating income

Electro Breeze ...?..... (should/should not) accept the special sales order because it will .......?

operating income.