Questions 4 and 5 refer to the following problem:

At the end of the year, a company offered to buy 4,050 units of a product from X Company for $11.00 each instead of the company's regular price of $19.00 each. The following income statement is for the 62,900 units of the product that X Company has already made and sold to its regular customers:

Sales		$1,195,100
Cost of goods sold		556,665
Gross margin		$638,435
Selling and administrative costs		162,911
Profit		$475,524

For the year, variable cost of goods sold were $423,946, and variable selling and administrative costs were $88,689. The special order product has some unique features that will require additional material costs of $0.78 per unit and the rental of special equipment for $3,000. 4. Profit on the special order would be

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5. The marketing manager thinks that if X Company accepts the special order, regular customers will be lost unless the selling price for them is reduced by $0.16. The effect of reducing the selling price will be to decrease firm profits by

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