Exercise #3: (Special Order) M Company operates a factory that is currently operating at 50% capacity. It is on track to make 40,000 units this year, but recently received a special order to make and sell 20,000 units for a selling price per unit of $9. There will be no marketing costs on this special order. Current costs at the 40,000-unit level as well as proposed costs at the 60,000-unit level are as follows:

	40,00 units	60,000 units
Direct Materials Cost	$80,000	$120,000
Direct Labor Cost	120,000	180,000
Factory Overhead (Fixed and variable)	240,000	300,000
Total Manufacturing Costs	$440,000	$600,000
Cost Per Unit	$11	$10

REQUIRED:

(a) From the information provided, present the detailed dollar amounts of relevant costs to consider in making this decision, including the total amount of change in company income or loss (please label) the company would incur if it accepts this special order.

(b) Then write a sentence telling whether the Special Order should be accepted or not.

(c) Then write several sentences explaining why you recommend the Special Order be accepted or not