Open Air Sporting Goods, Inc., manufactures a variety of sporting equipment. The sales manager for Open Air was approached by a retailer who was looking to have custom weight-lifting gloves made for a tournament theyre sponsoring. The special order would consist of 4,600 gloves, but the retailer has determined that, for their margins sake, they can pay no more than $12.80 per glove. Open Air has the excess capacity.

The costs of manufacturing one glove as described:

Direct materials $7.50

Direct labor $3.90

Variable overhead $1.60

Fixed overhead $3.10

Total $16.10

A. Assess the relevant costs and discuss briefly why they're relevant. 4 points.

B. Should the special order be accepted? If it is, what's the net effect to Open Air (either incrementally or on

a total-project approach)? 10 points.