Need B answered

Special Order Total cost data follow for Glendale Manufacturing Company, which has a normal capacity per period of 8,000 units of product that sell for $60 each. For the foreseeable future, regular sales volume should continue to equal normal capacity.

Direct material				$100,800
Direct labor				62,400
Variable manufacturing overhead				46,800
Fixed manufacturing overhead (Note 1)				38,400
Selling expense (Note 2)				35,200
Administrative expense (fixed)				15,000
				$298,600

Notes: 1. Beyond normal capacity, fixed overhead costs increase $1,800 for each 500 units or fraction thereof until a maximum capacity of 10,000 units is reached. 2. Selling expenses consist of a 6% sales commission and shipping costs of 80 cents per unit. Glendale pays only three-fourths of the regular sales commission on sales totaling 501 to 1,000 units and only two-thirds the regular commission on sales totaling 1,000 units or more.

Glendales sales manager has received a special order for 1,200 units from a large discount chain at a price of $36 each, F.O.B. factory. The controllers office has furnished the following additional cost data related to the special order:

1. Changes in the products design will reduce direct material costs $1.50 per unit. 2. Special processing will add 20% to the per-unit direct labor costs. 3. Variable overhead will continue at the same proportion of direct labor costs. 4. Other costs should not be affected.

a. Present an analysis supporting a decision to accept or reject the special order. (Round computations to the nearest cent.)

Differential Analysis
	Per Unit	Total
Differential revenue		43,200
Differential costs
Direct material	11.1
Direct labor	9.36
Variable manufacturing overhead	7.02
Selling:
Commission	1.44
Shipping (F.O.B. factory terms)	0
Total variable cost	28.92	34,704
Contribution margin from special order		8,496
Fixed cost increment:
Extra cost		5,400
Profit on special order		3,096

b. What is the lowest price Glendale could receive and still make a profit of $3,600 before income taxes on the special order?

Round answer to two decimal places, if applicable.

ANSWER: _________