Martinez Industries manufactures toasters. For the fi rst 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity:

Sales (350,000 units)................................................€4,375,000

Cost of goods sold.....................................................2,600,000

Gross profit.................................................................1,775,000

Operating expenses....................................................840,000

Net income..................................................................€ 935,000

Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed.

In September, Martinez receives a special order for 15,000 toasters at €7.60 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional €3,000 of shipping costs but no increase in fixed costs.

Instructions

a. Prepare an incremental analysis for the special order.

b. Should Martinez accept the special order? Why or why not?