ANSWER THE FOLLOWING QUESTIONS WITH FULL EXPLANATION AND STEP:

(4) Over the past few months, Wilson Tech Company produced and sold 10,000 units of Wartex each month. Monthly costs for Wartex are as follows: Direct materials.... $ 25,000 Direct labour........ 45,000 Variable factory overhead.. ? Fixed factory overhead...... 45,000 Variable marketing expenses (Shipping and sales commissions). one half of variable FOH Allocated marketing and administrative expenses..... 30,000 Total costs........ $190.000 The normal sales price is $25.00 per unit. One of the company's sales person has been negotiating a contract with a prospective customer who has offered to purchase 16,000 units of Wartex for $12.00 per unit. The salesperson does not expect any repeat business from this customer after this sale and does not believe that this sale will affect the normal sales of Wartex. The company has a production capacity sufficient to produce only 16,000 units of Wartex. As a consequence, the Company would have to rent additional equipment at a cost of $10,000 and pay overtime in the amount of $15,000 to manufacture the additional quantity of Wartex required. Required: Prepare a differential cost analysis showing whether the Company should accept this special order. (4)