WILL LEAVE A GOOD RATING

Charter Sports Company produces a kind of trampolines. The costs to produce one unit of trampolines are as follows: Direct materials $10 Direct labor ...... $8.5 Variable manufacturing overhead $6.5 Fixed manufacturing overhead .. $12 Variable selling expense. $6 Fixed selling expense $4 The regular selling price of one unit of trampolines is $50. A special order has been received by Charter Sports Company for 7,000 units of trampolines at a price of $45 per unit. If this special order is accepted, the variable selling expense per unit will be reduced by 75%. Total fixed manufacturing overhead and fixed selling expense would be unaffected except that Charter Sports Company will need to purchase a specialized machine to engrave a name on each unit of trampolines in the special order. The machine will cost $5,250 and will have no use after the special order is filled. If Charter Sports Company chooses to accept the special order, the effect on the company's operating income will be $ increase decrease (circle one)