Gruden Company produces golf discs which it normally sells to retailers for $7.17 each. The cost of manufacturing 19,600 golf discs is:

Materials		$10,584
Labor		31,164
Variable overhead		20,188
Fixed overhead		39,396
Total		$101,332

Gruden also incurs 4% sales commission ($0.29) on each disc sold. McGee Corporation offers Gruden $5 per disc for 5,500 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 $39,396 to $45,194 due to the purchase of a new imprinting machine. No sales commission will result from the special order.