Spirit Company Makes Special Equipment Used in Cell Towers A Foreign Company Has Offered to Buy 85 Units for Sells

Spirit Company makes special equipment used in cell towers.Each unit sells for $420.Spirit produces and sells 12,500 units per year.They have provided the following income statement data: $\begin{array}{c}\begin{array}{|l|r|}\hline \text { Traditional Format }\\\hline \text { Revenue } & \$ 5,250,000 \\\hline \text { Cost of goods sold } &2,800,000 \\\hline \text { Gross profit } & 2,450,000 \\\hline \text { Selling \& admin, expenses } & \underline{625,000} \\\hline & \\\hline & \\\hline &\\\hline &\\\hline \text { Operating income } & \$ 1,825,000 \\\hline\end{array}\begin{array}{l|r|}\hline \text { Contribution Margin Format}\\\hline \text { Revenue } & \$ 5,250,000 \\\hline \text { Variable costs: } &\\\hline \text { Manufacturing } & 800,000 \\\hline \text { Selling \& admin, } & \underline{400,000} \\\hline \text { Contribution margin } &4,050,000 \\\hline \text { Fixed costs: } \\\hline \text { Manufacturing }&2,000,000 \\\hline \text { Selling \& admin. } & 225,000\\\hline\text { Operating income }& \$ 1,825,000\\\hline \end{array}\end{array}$

A foreign company has offered to buy 85 units for a reduced sales price of $320 per unit.The marketing manager says the sale will not affect the company's regular sales.The sales manager says that this sale will require additional selling and administrative costs,as it is a one-time deal.The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs.If Spirit accepts the deal,how will this impact operating income? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

A) Operating income will increase by $19,040.
B) Operating income will decrease by $19,040.
C) Operating income will increase by $27,200.
D) Operating income will decrease by $27,200.