Using differential analysis—special customer order Dribble, Inc., manufactures basketballs. The...

Using differential analysis—special customer order

Dribble, Inc., manufactures basketballs. The company’s forecasted income statement for the year, before any special orders, is as follows:

	Amount	Per Unit
Sales	$8,000,000	$10.00
Manufacturing cost of goods sold	6,400,000	8.00
Gross profit	$1,600,000	$2.00
Selling expenses	600,000	1.00
Net operating income	$1,000,000	$1.00

Fixed costs included in the forecasted income statement are $4,000,000 in manufacturing cost of goods sold and $400,000 in selling expenses. A new client placed a special order with Dribble, offering to buy 100,000 basketballs for $6.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Dribble has sufficient capacity to manufacture 100,000 more basketballs, by what amount would differential income increase (decrease) as a result of accepting the special order?