Rutkey Collectibles is a small toy company that manufactures and sells metal replicas of classic cars. Each car sells for $40. The cost of each unit follows.

Materials	$	12
Labor		8
Variable overhead		4
Fixed overhead ($160,000 per month, 20,000 units per month)		8
Total costs per unit	$	32

One of Rutkeys regular customers asked the company to fill a special order of 3,000 units at a selling price of $28 per unit. Rutkeys can fill the order using existing capacity without affecting total fixed costs for the month. However, Rutkeys manager was concerned about selling at a price below the $32 cost per unit and has asked for your advice.

Required:

a. Prepare a schedule to show the impact of providing the special order of 3,000 units on Rutkeys profits in addition to the regular production and sales of 20,000 units per month.

b. Based solely on the data given, what is the lowest price per unit at which the model cars could be sold for the special order without reducing Rutkeys profits?

c. If Rutkey Collectibles company was operating at capacity, what would happen to operating profit if the special order was accepted?