1. Cessnod manufactures parts for aircraft engines. The selling price for these parts is $3,400 per unit. Cessnod has the capacity to manufacturer 110,000 parts but is currently manufacturing 95,000 parts. Cessnods current results per unit are as follows:

Per Unit

Direct materials $1,125

Direct labor 1,100

Variable manufacturing overhead 340

Fixed manufacturing overhead 216

Variable marketing 175

Fixed marketing 84

Total $3,040

1. Cessnod has received a special offer to make 10,000 parts for Selby at a price of $2,900 per part. Based on this information should Cessnod accept or reject Selbys offer? Show calculations to support your answer.
2. Suppose Cessnods capacity is for 100,000 units. If all other information is the same, should Cessnod accept or reject Selbys offer? Show calculations to validate your answer.