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San Diego Toy Company produces Zany Pencils. These pencils are manufactured with a monster head in place of an eraser to make them more attractive

San Diego Toy Company produces Zany Pencils. These pencils are manufactured with a monster head in place of an eraser to make them more attractive to children and are sold with 12 in a package. A large school district has requested to submit a special order for their first grade classes to use. The special order would consist of 50,000 packages with a total sales price of $115,000.

Production, marketing and other costs (per package):
Direct materials $ 0.50
Direct labor $ 0.70
Variable overhead $ 0.80
Fixed overhead $ 0.35
Variable marketing $ 0.07
Fixed marketing $ 0.38
Insurance, taxes and administrative salaries $ 0.90
Additional cost for the special order:
Design $ 8,350
Other setup costs $ 10,750

There are no marketing costs associated with the special order. The company would not have to interrupt their regular production if they accept the special order.. Required: 1. Decide whether or not San Diego Toy Company should accept the special order using only a short-term financial analysis.

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