Delta Company produces a single product. The cost of producing and selling a single unit of this product at the companys normal activity level of 90,000 units per year is:

Direct materials$ 2.30Direct labor$ 4.00Variable manufacturing overhead$ 0.60Fixed manufacturing overhead$ 3.95Variable selling and administrative expenses$ 1.20Fixed selling and administrative expenses$ 3.00

The normal selling price is $23.00 per unit. The companys capacity is 111,600 units per year. An order has been received from a mail-order house for 1,800 units at a special price of $20.00 per unit. This order would not affect regular sales or total fixed costs.

Required:

1. What is the financial advantage (disadvantage) of accepting the special order?
2. As a separate matter from the special order, assume the companys inventory includes 1,000 units that are inferior quality. The units must be sold through regular channels at a reduced price. The company does not expect the selling of these inferior units to affect regular sales. What unit cost is relevant for establishing a minimum selling price for the inferior units?