Question

The following information relates to a product produced by Orca Company: Direct materials $ 72 Direct...

The following information relates to a product produced by Orca Company:

Direct materials $ 72
Direct labor 40
Variable overhead 38
Fixed overhead 42
Unit cost $ 192


Fixed selling costs are $3,600,000 per year. Although production capacity is 630,000 units per year, Orca expects to produce only 504,000 units next year. The product normally sells for $210 each. A customer has offered to buy 60,260 units for $190 each. The customer will pay the transportation charge on the units purchased. If Orca accepts the special order, the effect on operating profits would be a:

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