Making a decision about special pricing. A company’s standard cost sheet for its single product shows the following:

The normal selling price of the product is $30. The company is operating at only about 60 percent capacity. It has received an offer to sell 2,000 units to a foreign government at a price of $18.50 per unit. Additional selling and administrative expenses applicable to the special order would be $.50 per unit. Should the order be accepted? Show all calculations.

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Materials $10.00 Labor (1 hr at $6 per hr) Manufacturing Overhead Variable (1 hr at $4 per hr) $4.00 Fixed ($30,000 5,000 hr) Total 6.00 6.00 10.00 $26.00