A company manufactures a product, which has the following unit costs and wants to determine if they should accept a special order offer based on the information provided.

Direct Materials	$15.00
Direct Labor	$10.00
Variable Overhead	$4.00
General Fixed Overhead Allocated (total fixed costs will remain the same with relevant range).	$7.00
Production capacity is 90,000 units per year	Expects to produce only 75,000 units next year.

The product normally sells for $25 each. A customer has offered to buy 14,000 units for $22 each.

a. What is the relevant (incremental) cost to make a unit for the special order?

b. What is the effect on income if the special order is accepted?

c. Should the company accept the special order?