SmoothStar Ltd manufactures skateboards. Several weeks ago, the firm received a special-order inquiry from Skateboard Marketing Ltd to purchase 11,000 units. The cost data for SmoothStar Ltds Champion model skateboard follow.

Direct material	$16.40
Direct labour: 0.25 hours at $18.00	$4.50
Variable manufacturing overhead	$7.50
Fixed manufacturing overhead	$25.00
Total	$53.40

The following additional information is available:

	The normal selling price of the Champion model is $75.00. However, Skateboard Marketing Ltd has offered SmoothStar Ltd only $31.50 because of the large quantity it is willing to purchase.
	Skateboard Marketing Ltd requires a modification of the design that will allow a $4.20 reduction in the direct material cost.
	SmoothStar Ltds production supervisor notes that the company will incur $7,400 in additional setup costs and will have to purchase a $4,800 special device to manufacture these units. The device will be discarded once the special order is completed.
	SmoothStar Ltd will allocates $3,600 of existing fixed administrative costs to the order as part of the cost of doing business.

Required:
(a)	Determine whether the order should be accepted. Show calculations.	(7 marks)
(b)	List three options that SmoothStar Ltd may consider if it wants to do business with Skateboard Marketing Ltd to build a long-term business relationship.