Company's custom$-$printed notebooks:

Manufacturing Cost

Direct Materials$/$unit

$$1\mathrm{.}00$

Direct Maufacturing labor$/$unit

$$1\mathrm{.}20$

Variable mfg$.$ Indirect costs$/$unit

$$0\mathrm{.}80$

Total Fixed mgt$.$ Indirect costs

$$15,000$

Marketing costs

Variable$/$unit

$$1\mathrm{.}60$

Fixed

$$18,000$

Nelson's production output level for these notebooks are $20,000$ units. Its sales demand was $15,000$ units for the year.

Required:

The following situations refer only to the preceding data: there is no connection between the situations. Unless stated otherwise, assume a regular selling price of $$7$ per unit. Choose the best answer to each question. Show your calculasions.

In an inventory of $5,000$ units of the custom printed notebooks, the unit cost reported in the balance sheet should be:

A contract with the government for $4,000$ units of the notebooks calls for paying a special order price that is equivalent to the reimbursement of all manufacturing costs $|$ plus a fixed fee of $$1,000.$ No variable marketing costs are incurred on the government contract. What is the impact on Nelson's income if it accepts this special order? Should Nelson accept the special order?