Millennial Manufacturing Incurs $38 of Variable Costs and $22 of Allocated

Essay

Millennial Manufacturing incurs $38 of variable costs and $22 of allocated fixed costs in the production of an ergonomic backpack that normally sells for $90. A buyer in Canada offers to purchase 5,000 units at $56 each. Millennial Manufacturing has excess capacity and can handle the additional production. What effect will acceptance of this offer have on the company's operating income?