Goshford Company produces a single product and has capacity to produce 100,000 units per month. Costs to produce its current sales of 80,000 units follow. The regular selling price of the product is $100 per unit. Management is approached by a new customer who wants to purchase 20,000 units of the product for $75 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no addi-tional fixed selling and administrative expenses. The customer is not in the company's regular selling territory, so there will be a $5 per unit shipping expense in addition to the regular variable selling and administrative expenses.

Direct materials ............. (per unit) $12.50 ........... (costs at 80,000 units) $1,000,000

Direct labor .................................... 15.00 .................................................. 1,200,000

Variable manufacturing overhead .. 10.00 .................................................. 800,000

Fixed manufacturing overhead ....... 17.50 ................................................. 1,400,000

Variable selling/admin expenses ..... 14.00 ................................................ 1,120,000

Fixed selling/admin expenses .......... 13.00 ................................................ 1,040,000

Totals ............................................... $82.00 ............................................... $6,560,000

Should management accept or reject the new business? Please explain how you got to this conclusion / what the effect on net income would be.