Porcupine Inc., an ice-cream company, is operating at 80 percent of its productive capacity, 10 million one-quart units.An ice-cream distributor from a different geographic region has offered to buy 2 million units of premium ice cream at $1.75 per unit, provided its own label can be attached to the product.Normal selling price is $2.50 per unit.Cost information for the premium ice cream follows:

Total of 8,000,000 Units Unit Cost Variable costs: Direct materials $7,600,000 $0.95 Direct labor 2,000,000 0.25 Packaging 1,600,000 0.20 Commissions 160,000 0.02 Distribution 240,000 0.03 Other variable costs 400,000 0.05 Non-unit-level costs: Purchasing ($8 x 40,000 purchase orders) 320,000 0.04 Receiving ($6 x 80,000 receiving orders) 480,000 0.06 Setting up ($8,000 x 50 setups) 400,000 0.05 Fixed costs 1,600,000 0.20 Total Costs $14,800,000 $1.85