1) What is the expected net value to Plastic Products of the special order?

2) Should Plastic Products accept the order? Why or why not?

Plastic Products Inc. Plastic Products produces plastic jugs for cleaning supplies. The company has just received a request for a special order of 6,000 units of a modified jug to be shipped at the end of the month at a selling price of $7.00 each. The request is from a remote customer whose regular supplier has had some production delays. Plastic Products has a production capacity of 90,000 jugs per month. At present, the regular sales volume is 85,000 jugs per month and customers purchase jugs from a number of similar suppliers in the market. The company's costing information is as follows: Jug Production Costs $/Unit $/Month Regular selling price 11.00 Variable production cost 4.60 Variable selling expense 1.00 Fixed overhead production cost 144,500 1.70 The modified jugs would incur the same variable production costs as the regular jugs. If the special order is accepted, there will be no selling expenses, however, there will be a delivery cost of $0.25 per jug. To make the modified jug the company would have to purchase a special fitting at a cost of $2,000. Plastic Products would have no future use for the fitting after the special order is filled