Special Order

Mickey Mouse Company has an annual plant capacity of 3,000 units. Data concerning this product are given below:

Annual sales at regular selling prices........2,500 units Manufacturing costs: Variable...............................................$20 per unit Fixed (annual).......................................$75,000 Selling and administrative expenses: Variable (sales commissions)..............$6 per unit Fixed (annual)..........................................$15,000

The company has received a special order for 500 units at a selling price of $45 each. Regular sales would not be affected, and sales commissions on the 500 units would be reduced by one-third. This special order would have no impact on total fixed costs.

Required: Determine whether the company should accept the special order