Star Lights, Incorporated produces a light fixture with the following full product cost (at a production capacity of 100,000 units)

Direct materials Direct labor Variable overhead Fixed overhead Unit cost

$12.00 3.00 4.00 6.00 $25.00

The product normally sells for $38 per unit. Variable selling expenses are $2 per unit sold, while fixed selling and administrative costs total $400,000 per year.

Because of a depressed housing market, the company expects to only be able to sell 60,000 units in the coming year, leaving it with considerable excess capacity that it would like to use. It has the opportunity to fulfill a one-time special order from a customer who has offered to purchase 25,000 units for $18 each.

The requested units would use less expensive materials than those normally used by Star Lights, so the direct materials cost per unit would be only $8. Because Star Lights would not have to pay sales commissions on the order, the variable selling expenses would be just $1 per unit for shipping costs.

Assume all facts as presented above. If the order required Star Lights to invest in special tooling that cost $60,000, what is the minimum unit sales price that Star Lights would be willing to accept for the special order?

By how much will Star Lights profits change if the order for 25,000 units is accepted?