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LO1, 2,4 M17-16. Special Order Soni LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2017 is as follows: MBC

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LO1, 2,4 M17-16. Special Order Soni LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2017 is as follows: MBC SONI, LTD Budgeted Income Statement For the Year 2017 Sales (544 per unit) . .. ... . . . . .. ... $4,400,000 Cost of good sold ($36 per unit). ..... .. .. (3,600,000) Gross profit. .. . ........ 800,000 Selling expenses ($3 per unit)...........!. (300,000) Net income ...in SO 500,000 Additional Information (1) Of the production costs and selling expenses, $800,000 and $100,000, respectively, are fixed. (2) Soni LTD received a special order from a hospital supply company offering to buy 12,500 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently suf- ficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $36 to make a product to sell for $30." Required Do you think the company should accept the special order? Should the decision be based only on the profitability of the sale, or are there other issues that Soni should consider? Explain

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