Score, Inc. manufactures basketballs. The company’s forecasted income statement for the year, before any special orders, is as follows:
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 Score, offering to buy 100,000 basketballs for $6 each. The variable selling expenses are commissions on sales that will not be incurred on the special order. Assuming that Score 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?
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