Alamo Metal Works produces at 80% of its total capacity. Its fixed factory overhead is $2,500,000. Unit contribution margin is as follows:

Selling price $35

Variable costs 25

Contribution margin $10

The military has offered to buy 50,000 units at a one-time price of $27 per unit. There is enough capacity to accommodate the additional production.

a. Should the company agree to the offer?

b. How much additional contribution margin, if any, would the special order generate? (This is where you show me your calculations.)

c. Other than it not being a good deal, what are some other circumstances that would lead to the company rejecting the offer?