Saxon Company (Special Orders and Opportunity Costs) Saxon Company produces a single product X. Operating at capacity, the company can produce 50,000 units oI'per year, and costs associated with this level of capacity are as follows: Unit Total DM $12 $600,000 DL 3 150,000 VOH 1 50,000 FOH 5 250,000 Variable selling expenses 2 100,000 Fixed selling expenses _4 200,000 Total cost per unit _? $1,350,000 13,014.32 The selling price of X is $32 each. A government agency would like to make a one-time-only purchase of 10,000 units of X. The agency would reimburse Saxon Company for all costs of production (variable and xed) associated with its order and pay $4 per units additionally. There would be no variable selling expenses associated with this offer. 1. Assume that Saxon Company currently produces and sells 40,000 units of X. What is the impact of the government agency's special order on the company's prot? 2. Assume that current production and sales of Saxon Company is 50,000 units of X, and hence, if the special offer is accepted, the company has to give up 10,000 units of its regular sales. What is the impact of the government agency's special order on the comnanv's prot