4.- The Immanuel Company has just obtained a request for a special order of 6,000 jigs to be shipped at the end of the month at a selling price of $7 each. The company has a production capacity of 90,000 jigs per month with total fixed production costs of $144,000. At present, the company is selling 80,000 jigs per month through regular channels at a selling price of $11 each. For these regular sales, the cost for one jig is:

Variable production cost:4.65

Fixed production cost:1.50

Variable selling expense:1.00

If the special order is accepted, Immanuel will not incur any selling expense; however, it will incur shipping costs of $0.30 per unit.

Required:

1.List 4 issues that should be considered before accepting or rejecting this order.

2.If Immanuel accepts this special order, what will be the increase or decrease in monthly net operating income.

3.What is the lowest price Immanuel should accept on this special order without losing money?

4.If Immanuel had regular sales of 70,000 bins per month, what would be the change in monthly operating income if it accepted the special order?