Special Order

Thousand Star Company produces a single product. The cost of producing and

selling a single unit of this product at the company's normal activity level of

$40,000$ units per month is as follows:

The normal selling price of the product is $$86\mathrm{.}10$ per unit. An order has been

received for an overseas customer for $2,000$ units to be delivered this month at a

special discounted price of $$76\mathrm{.}40.$ This order would have no effect on the

company's normal sales and would not change the total amount of the company's

fixed costs. The variable selling and administrative expense would be $$1\mathrm{.}20$ less

per unit on this order than on normal sales. Direct labor is a variable cost in this

company.

Compute the effect to net income of accepting the special order.