11. Edge Company produces two models of its product with the same machine. The machine has a capacity of 174 hours per month. The following information is available. Standard Deluxe Selling price per unit $ 240 $ 270 Variable costs per unit 105 162 Contribution margin per unit $ 135 $ 108 Machine hours per unit 1 hour 2 hours Maximum unit sales per month 650 units 250 units

12. JART manufactures and sells underwater markers. Its contribution margin income statement follows. Contribution Margin Income Statement For Year Ended December 31 Per Unit Annual Total Sales (450,000 units) $ 6.00 $ 2,700,000 Variable costs Direct materials 1.49 670,500 Direct labor 0.31 139,500 Variable overhead 0.60 270,000 Contribution margin 3.60 1,620,000 Fixed costs Fixed overhead 0.30 135,000 Fixed general and administrative 0.25 112,500 Income $ 3.05 $ 1,372,500 A potential customer offers to buy 55,000 units for $3.00 each. These sales would not affect the companys sales through its normal channels. Details about the special offer follow. Direct materials cost per unit and variable overhead cost per unit would not change. Direct labor cost per unit would be $0.49 because the offer would require overtime pay. Accepting the offer would require incremental fixed general and administrative costs of $5,500. Accepting the offer would require no incremental fixed overhead costs. Required: 1. Compute income from the special offer. 2. Should the company accept or reject the special offer?