Jayper Inc. manufactures widgets. For the first six months of 2015 the company reported the following operating results.

Sales

Cost of goods sold

Selling and Administrative expenses Net income

Amount

$4,000,000 3,200,000 320,000 $480,000

Per unit

$50.00 40.00 4.00 $6.00

Fixed costs included in Cost of goods sold in the period were $800,000; fixed costs included in Selling and Administrative expenses were $60,000.

Jayper recently received a special order from an overseas customer XYZ Ltd. for 9,000 widgets at a sales price of $36.50 per widget. Accepting the order would increase variable selling and administrative expenses by $0.75 per unit because of additional shipping costs, but it would not increase fixed costs or other variable costs per unit.

Assume that Jayper has just enough sufficient excess capacity to fill this one-time order.

You may ignore income taxes.

Required

1. Prepare an incremental analysis for this special order. That is, show in detail by much Jayper's netincome would increase (decrease) if this order was accepted?
2. What is the break-even selling price per unit for this order? What selling price would be required to produce a contribution margin of $6.00 per unit on this order? How much would the additional net income be?
3. Identify and briefly justify what you would consider to be thetwomost important non-financial factors that management should consider in making its decision?
4. Taking all this into consideration, should Jayper Inc. accept this order? Briefly justify your answer, citing relevant quantitative and qualitative factors.