Gruden Company produces golf discs, which it normally sells to retailers for $12 each. The cost of manufacturing 18,400 golf discs is: Materials Labour $10,488 30,544 Variable overhead 22,080 Fixed overhead 41,000 Total $104,112 Gruden also incurs 5% sales commission ($0.60) on each disc sold. McGee Corporation offers Gruden $7.20 per disc for 4,600 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 $41,000 to $46,600 due to the purchase of a new imprinting machine. No sales commission will result from the special order.