Juliani Company produces a single product. The cost of producing and selling a single unit of

this product at the company's normal activity level of 50,000 units per month is as follows:

Direct materials

$32.50

Direct labour

7.20

Variable manufacturing overhead

1.30

Fixed manufacturing overhead

20.90

Variable selling & administrative expense

1.90

Fixed selling & administrative expense

7.30

The normal selling price of the product is $75.00 per unit.

An order has been received from an overseas customer for 3,000 units to be delivered this

month at a special discounted price. This order would have no effect on the company's normal

sales and would not change the total amount of the company's fixed costs. The variable selling

and administrative expense would be $0.30 less per unit on this order than on normal sales.

Direct labour is a variable cost in this company.

Required:

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $65.60 per unit. By how much would this special order increase (decrease) the company's net operating income for the month?

Suppose there is not enough idle capacity to produce all of the units for the overseas customer and accepting the special order would require cutting back on production of 1,000 units for regular customers. What would be the minimum acceptable price per unit for the special order?

In deciding whether to accept or reject a special order qualitative or non-quantitative factors also need to be considered. Identify and briefly explain some of the qualitative factors that Juliani company should consider.