Levy Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 1,000 units. Levy made 26,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.

Materials cost ($27 per unit 26,000) $ 702,000

Labor cost ($21 per unit 26,000) 546,000

Manufacturing supplies ($2 26,000) 52,000

Batch-level costs (26 batches at $4,000 per batch) 104,000

Product-level costs 200,000

Facility-level costs 310,000

Total costs $ 1,914,000

Cost per unit = $1,914,000 26,000 = $73.6

Required:

a-1. Rios Motels has offered to buy a batch of 400 blankets for $58 each. Levy's normal selling price is $94 per unit, calculate the relevant cost per unit for the special order.

a-2. Should Levy accept the special order? Yes No

b-1. Rios offered to buy a batch of 1,000 blankets for $58 per unit, calculate the relevant cost per unit for the special order.

b-2. Should Levy accept the special order? Yes No