Exercise 7-2 Gruden Company produces golf discs which it normally sells to retailers for $7 each. The cost of manufacturing 20,200 golf discs is: 9,090 29,290 Materials Labor Variable overhead 19,392 Fixed overhead 39,794 Total $97,566 Gruden also incurs 8% sales commission ($0.54) on each disc sold. McGee Corporation offers Gruden $4.77 per disc for 4,740 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 $39,794 to $45,304 due to the purchase of a new imprinting machine. No sales commission will result from the special order