Problem:
A company manufactures a product. The company can manufacture 1,200,000 units a year at a variable cost of $3,000,000 and a fixed cost of $1,800,000. Based on projections for next year, 960,000 units will be sold at the regular price of $20.00 each. A special order has been received for 240,000 units to be sold at a 70% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's net operating income be increased as a result of the special order?