Questions 4 and 5 refer to the following problem:

At the end of the year, a company offered to buy 4,770 units of a product from X Company for $11.00 each instead of the company's regular price of $17.00 each. The following income statement is for the 64,900 units of the product that X Company has already made and sold to its regular customers:

Sales		$1,103,300
Cost of goods sold		475,068
Gross margin		$628,232
Selling and administrative costs		166,793
Profit		$461,439

For the year, variable cost of goods sold were $356,301, and variable selling and administrative costs were $82,423. The special order product has some unique features that will require additional material costs of $0.71 per unit and the rental of special equipment for $2,000. 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 $0.13. The effect of reducing the selling price will be to decrease firm profits by

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