The Varone Company makes a single product called a Hom. The company has the ca

The Varone Company makes a single product called a Hom. The company has the capacity to produce 40000 Homs per year. Per unit costs to produce
and sell one Hom at that activity level are:

The regular selling price for one Hom is $100. A special order has been received at Varone from the Fairview Company to purchase 7900 Homs
next year at 10% off the regular selling price. If this special order were accepted the variable selling expense would be reduced by 20%.
However Varone would have to purchase a specialized machine to engrave the Fairview name on each Hom in the special order. This machine would
cost $11900 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 30000 to 40000 Homs per year. Assume direct labor is a variable cost.

If Varone can expect to sell 31000 Homs next year through regular channels and the special order is accepted at 10% off the regular selling
price the effect on net operating income next year due to accepting this order would be a: