E7.4 Use incremental analysis for special order. (LO 2), AN Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are produce 1,000,000 follows. Total Per Undergarment Direct materials $2,000,000 $2.00 750,000 Direct labor 0.75 1,000,000 1,500,000 250,000 $5,500,000 Variable manufacturing overhead 1.00 Fixed manufacturing overhead Variable selling expenses 1.50 0.25 $5.50 Totals The U.S. Army has approached Klean Fiber and expressed Go undergarments for soldiers in extremely for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. interest in purchasing 250,000 Y- warm climates. The Army would pay the unit cost an additional $1 per undergarment to cover all other costs and provide a Instructions Using incremental analysis, determine whether Klean Fiber should accept the Army's offer