. Costs Exercise 10-3 Accept new business or not A1 Goshford Company produces a single product and has capacity to produce 100,000 units per month to produce its current sales of 80,000 units follow. The regular selling price of the product is $100 per unit. Management is approached by a new customer who wants to purchase 20,000 units of the product for $75 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no addi- tional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $5 per unit shipping expense in addition to the regular variable selling and administrative expenses. Costs at 80,000 Units Per Unit $12.50 15.00 10.00 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses $1,000,000 1.200,000 800,000 17.50 1,400,000 1,120,000 13.001.040,000 $6,560,000 14.00 2.00 Check (1) Additonal volume 1. Determine whether management should accept or reject the new business. effect on net income $370,000 2. What nonfinancial factors should management consider when deciding whether to take this order