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Smooth Brew manufactures cappuccino makers. For the first eight months of 2006, the company reported the following operating results while operating at 80% of plant capacity:

Sales (120,000 units) $6,000,000

Cost of goods sold 3,600,000

Gross profit 2,400,000

Operating expenses 1,800,000

Net income $ 600,000

An analysis of costs and expenses reveals that variable cost of goods sold is $25 per unit and variable operating expenses are $10 per unit.

In September, Smooth Brew received a special order for 5,000 machines at $40 each from a major coffee shop franchise. Acceptance of the order would result in $2,000 of shipping costs but no increase in fixed expenses.

Instructions

Prepare an incremental analysis for the special order.

Should Smooth Brew accept the special order? Justify your answer.