2) Smith Industries has an annual plant capacity of 80,000 units, current production is 65,000 units per year. At the current production volume, the variable cost per unit is $40 .00, and the fixed cost per unit is $4.50. The normal selling price of Castillo's product is $60 .00 per unit. Smith has been asked by Miami Company to fill a special order for 8,000 units of the product at a special sales price of $38 .00 per unit. Miami is in a foreign country where Smith does not currently operate. Miami will market the units in its country under its own brand name, so the special order is not expected to have any effect on Smith's regular sales.

Requirements: 1. How would accepting the special-order impact Smith's operating income? Should Smith accept the special order. 2. How would your analysis change if the special-order sales price were to be $50 .00 per unit and Smith would have to pay an attorney a fee of $35,000 to make sure it is complying with export laws and regulations relating to the special order?