The Varone Company makes a single product called a Hom. The company has the capacity to produce 40,000 Homs per year. Per unit costs to produce and sell one Hom at that activity level are $28 $12 $12 $15 %10 $7 Direct materlals Direct labor Varlable manufacturing overhead Flxed manufacturing overhead Variable selling expense Flxed selling expense The regular selling price for one Hom is $80. A special order has been recelved at Varone from the Falrview Company to purchase 7800 Homs next year at 20% off the regular selling price. If this special order were accepted, the variable selling expense would be reduced by 30%. However, Varone would have to purchase a speclalized machine to engrave the Falrview name on each Hom In the special order. This machine would cost $12,500 and It would have no use after the special order was filled. The total fixed costs, both manufacturing and selling, are constant within the relevant range of 30,000 to 40,000 Homs per year Assume direct labor is a varlable cost If Varone has an opportunity to sell 35,970 Homs next year through regular channels and the speclal order Is accepted for 20% off the regular selling price, the effect on net operating income next year due to accepting this order would be a O $43,520 decrease O $43,520 increase $41,360 increase O $41,360 decrease