Stangle Company Manufactures Ties The Ties Normally Sell for $22 Each

Essay

Stangle Company manufactures ties.When 28,000 ties are produced,the costs per unit are:
$\begin{array} { l } \text {Direct materials }&\$0.60 \\ \text {Direct manufacturing labor }&\$ 3.00 \\ \text {Variable manufacturing overhead }&\$ 1.20 \\ \text {ixed manufacturing overhead }&\$1.60 \\ \text {Variable selling }&\$ 0.80 \\ \text { Fixed selling}&\$ 1.13 \\\end{array}$

The ties normally sell for $22 each.The company has received a special order for 2,000 ties at $8.00 per tie.The company will incur an additional variable selling cost of $1.50 per unit with the special order.The company has excess capacity.
Required:
Compute the amount by which the operating income would change if the order were accepted.