Special Order

Smooth Move Company manufactures professional paperweights and has been approached by a new customer with an offer to purchase $15,000$ units at a per$-$unit price of $$7\mathrm{.}00.$ The new customer is geographically separated from Smooth Move's other customers, and existing sales will not be affected. Smooth Move normally produces $91,000$ units but plans to produce and sell only $65,000$ in the coming year. The normal sales price is $$16$ per unit. Unit cost information is as follows:

Direct materials

Direct labor

Variable overhead

Fixed overhead

Total

$$3\mathrm{.}10$

$2\mathrm{.}50$

$1\mathrm{.}15$

$1\mathrm{.}80$

$$8\mathrm{.}55$

Suppose a customer wants to have its company logo affixed to each paperweight using a label. Smooth Move would have to purchase a special logo labeling machine that will cost $$12,000.$ The machine will be able to label the $15,000$ units and then it will be scrapped $($with no further value$).$ No other fixed overhead activities will be incurred. In addition, each special logo requires additional direct materials of $$0\mathrm{.}20.$

Required:

CONCEPTUAL CONNECTION: Should Smooth Move accept the special order?

By how much will profit increase or decrease if the order is accepted? If your answer is decrease, enter negative value.

Decrease $$$