Exercise 26-2 Gruden Company produces golf discs which it normally sells to retailers for $7each. The cost of manufacturing 19,900 golf discs is: Materials Labor Variable overhead 21,094 Fixed overhead Total $10,945 29,651 39,004 $100,694 Gruden also incurs 5% sales commission ($0.35) on each disc sold McGee Corporation offers Gruden $4.77 per disc for 5,350 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 $39,004 to $45,374 due to the purchase of a new imprinting machine. No sales commission will result from the special order