Assume that MTA Sandwiches sells sandwiches for $3.40 each. The cost of each sandwich follows:

Materials	$	0.80
Labor		0.70
Variable overhead		0.50
Fixed overhead ($20,805 per month, 21,900 units per month)		0.95
Total cost per sandwich	$	2.95

One of MTA's regular customers asked the company to fill a special order of sandwiches at a selling price of $2.45 each for a fund-raising event sponsored by a social club at the local college. MTA has capacity to fill it without affecting total fixed costs for the month. MTA's general manager was concerned about selling the sandwiches below the cost of $2.95 per sandwich and has asked for your advice.

Required:

a. Prepare a schedule to show the impact on MTA's profits of providing 400 sandwiches in addition to the regular production and sales of 21,900 sandwiches per month. (Select option "higher" or "lower", keeping Status Quo as the base. Select "None" if there is no effect.)

Status Quo Alternative Difference

21,900 Units 22,300 Units

Sales Revenue

Less Variable Costs

Materials

Labor

Variable Overhead

Total Variable Costs

Contribution Margin

Less Fixed Costs

Operating Profit

b. Based solely on the data given, what is the lowest price per sandwich at which the special order can be filled without reducing MTA's profits? (Round your answer to 2 decimal places.)

Lowest Price per sanwich: