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Special order - 17 minutes Turner Company makes dance shoes. The company normally sells 8,000 pairs of shoes but has the capacity to make up

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Special order - 17 minutes Turner Company makes dance shoes. The company normally sells 8,000 pairs of shoes but has the capacity to make up to 10,000 pairs of dance shoes. At their current level of production, the company has the following costs for producing and selling its products: Per unit At capacity (10,000 units) Direct materials $12.50 125,000 Direct labour 5.00 50,000 3.50 Variable manufacturing overhead 35,000 Fixed manufacturing overhead 4.50 45,000 Sales commissions 5.50 55,000 Total costs $31.00 $310,000 A pair of shoes normally sells for $55. An order has been received for 300 pairs of shoes. However, the buyer has requested a price of $35 due to the large size of the order. If the order were accepted it would not affect the company's regular sales. There would be no sales commissions and fixed costs would not be affected by the order. In addition, the company that put in the order would like sequins added to the shoes, which would increase materials costs by $0.50 per pair and increase labour costs by $0.50 per pair. In addition, the company would need to purchase a new machine at a cost of $3,000. Required: a) Determine the net dollar advantage or disadvantage of accepting the order b) Assume that in addition to the sequins, the company placing the order would like each pair of shoes to have a lace overlay. This process can only be done by hand and would increase labour costs by $3.50 per pair of shoes. Should the company accept the order

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