4. Woodson Corporation provided the following information regarding its only product: Sale price per unit $65.00 Direct materials used $160,000 Direct labor incurred $185,000 Variable manufacturing overhead $120,000 Variable selling and administrative expenses $70,000 Fixed manufacturing overhead $65,000 Fixed selling and administrative expenses $12,000 Units produced and sold 10,000 Assume no beginning inventory Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 1,200 units at a sale price of $60 per product assuming additional fixed manufacturing overhead costs of $5,000 is incurred? (NOTE: Assume regular sales are not affected by the special order.)
A. Increase by $72,000
B. Decrease by $2,800
C. Increase by $7,800
D. Increase by $2,800
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