E$7-2$: Gruden Company produces golf discs which it normally sells to retailers for $$7$ each. The

cost of manufacturing $20,000$ golf discs is:

Gruden also incurs $5\%$ sales commission $)$ on each disc sold.

McGee Corporation offers Gruden $$4\mathrm{.}80$ per disc for $5,000$ discs. McGee would sell the

discs under its own brand name in foreign markets not yet served by Gruden. If Gruden

accepts the offer, its fixed overhead will increase from $$40,000$ to $$46,000$ due to the

purchase of a new imprinting machine. No sales commission will result from the special order.

a$)$ Prepare an incremental analysis for the special order.

b$)$ Should Gruden accept the special order? Why or why not?