The Following Information Relates to a Product Produced by Orca

Multiple Choice

The following information relates to a product produced by Orca Company:
$$\begin{array} { | l c | } \hline \text { Direct materials } & \$ 20 \\\hline \text { Direct labor } & 14 \\\hline \text { Variable overhead } & 12 \\\hline \text { Fixed overhead } & 16 \\\hline \text { Unit cost } & \$ 62 \\\hline\end{array}$$
Fixed selling costs are $1,000,000 per year.Although production capacity is 500,000 units per year,Orca expects to produce only 400,000 units next year.The product normally sells for $80 each.A customer has offered to buy 60,000 units for $60 each.The customer will pay the transportation charge on the units purchased.If Orca accepts the special order,the effect on income would be a:

A) $120,000 increase.
B) $360,000 increase.
C) $840,000 increase.
D) $1,200,000 decrease.