Required:

1. Suppose Winchester received an offer to buy 3,000 units of its product for $23/unit. Winchester would incur unit-level costs plus incur a one-time cost of $8,500 to set up its machines to meet a specific customer request to modify the product. No other fixed cost would change. Should Winchester accept the special order? Circle one: Yes No
2. Compute the change in Winchesters profit to support your answer: Profit = $

Winchester Company produces and sells a food processor that it prices at a 25 percent markup on total cost. Based on data pertaining to producing and selling 50,000 food processors, Winchester computes the sales price per food processor as follows: Unit-level costs Fixed costs Total cost (a) Markup (a X.25) Total sales revenue (b) Sales price per unit (b + 50,000) $ 900,000 640,000 $1,540,000 385,000 $1,925,000 $38.50