Mars Inc provided the following information regarding its single product:
Direct Materials used = $240000
Direct labor incurred = $420000
Variable manufacturing overhead = $160000
Fixed manufacturing overhead = $100000
Variable selling and administrative expenses = $60000
Fixed selling and administrative expenses = $20000
The regular selling price for the product is $80. The annual quantity units produced and sold is 40000 units (the cost above relate to the 40000 units
production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 1000 units at a sale price of $40 per product? The special order units would not
requaire any variable selling and administrative expenses?