genis battery company $5-45$ Incremental revenues and costs, special order Genis Battery Company is

considering accepting a special order for $50,000$ batteries that it received from

a discount retail store. The order specified a price of $$4$ per unit, which

reflects a discount of $$0\mathrm{.}50$ per unit relative to the company's regular price of

$$4\mathrm{.}50$ per unit. Genis's accounting department has prepared the following

analysis to show the cost savings resulting from additional sales:

No additional fixed costs will be incurred for this order because the

company has surplus capacity. Because the average cost per unit will be

reduced from $$4\mathrm{.}20$ to $$3\mathrm{.}90,$ Genis's president believes that a reduction in the

price to $$4$ is justified for this order.

Required

a$.$ Should the order for the $50,000$ units at a price of $$4$ be accepted? What will be the impact on

Genis's operating income?

b$.$ Is the accounting department's analysis the best way to evaluate this decision? If not, what

alternative method can you suggest?

c$.$ What other considerations are important in this case? Why?