Special order decision

Problems 11 Special order decision: Qualitative factors LOI Lindsey Smith, Inc., has the following cost structure for the upcoming year: Sales (20000 units @ $25) $500000 Manufacturing costs: Variable $10 per unit Fixed $180000 Marketing and administrative costs: Variable $5 per unit Fixed $20000 Required a What is the expected level of profit? b Should the company accept a special order for 1000 units at a selling price of $20 if variable marketing expenses associated with the special order are $2 per unit? What will be the incremental profit if the order is accepted? Suppose that the company received a special order for 3000 units at a selling price of $19, with no variable marketing expenses. What would be the impact on profit? Assume that if the special order were accepted, ail the regular customers would be aware of the price paid for the special order. Would that influence your decision? Why