Gallagher Corp. manufactures TVs and sells them for $360 each. The firm manufactures and sells 10000 TVs. Gallagher incurs the following production costs.

• Direct materials, $2000000,
• Direct labor, $500000,
• Variable manufacturing overhead costs, $200000, and
• Fixed manufacturing overhead costs, $140000.

1. In addition, Gallagher incurs $360000 in variable marketing costs and $180000 in fixed administrative costs. Hennesey has approached Gallagher and asked to purchase 2000 TVs at $300 each. Gallagher only has excess capacity to make half of the order from Hennesey. Should Gallagher accept the special order? It would have to reduce sales to its regular customers by 50 percent of the special order units to stay within its capacity

2. In addition, Gallagher incurs $360000 in variable marketing costs and $180000 in fixed administrative costs. Hennesey has approached Gallagher and asked to purchase 2000 TVs at $300 each. Gallagher has the excess capacity to make the extra 2000 TVs. Should Gallagher accept the order from Hennesey? Why?