Exercise 20-2 Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 17,800 golf discs is: Materials Labor Variable overhead 17,266 Fixed overhead Total 8,366 25,988 35,600 $87,220 ruden also incurs 7% sales commission ($0.48) on each disc sold. McGee Corporation offers Gruden $4.81 per disc for 5,910 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 $35,600 to $40,250 due to the purchase of a new imprinting machine. No sales commission will result from the special order