Electro Company produces small electrical engines. The manufacturing costs per unit to produce a small engine are given.

Variable selling costs to obtain and fill orders normally average \(\$ 3.00\) per unit when Electro sells the engines to local customers. Recently, however, Electro paid \(\$ 80000\) to advertise its various products in an international trade magazine. The company has just received an order from a large mail-order merchandising company in France for 700 engines at a total offering price of \(\$ 24000\). The merchandising company is willing to pay all shipping charges except the initial packaging, which costs \(\$ 1.50\) per engine.
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Calculate the total incremental cost that Electro would expect to incur if it accepted and filled this order. Should Electro produce and sell the 700 engines to the French company?

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Direct materials Direct labour Variable overhead Fixed overhead Total manufacturing cost per unit $13.00 11.50 8.50 12.00 $45.00