The following information relates to a product produced by Malkovich Company:

Direct materials$24

Direct labor 15

Variable overhead30

Fixed overhead18

Unit cost$87

Fixed selling costs are $500,000 per year, and variable selling costs are $12 per unit sold. Although production capacity is 600,000 units per year, the company expects to produce only 400,000 units next year. The product normally sells for $120 each. A customer has offered to buy 60,000 units for $90 each.

If the firm produces the special order, the effect on income would be a

SUPPORTING CALCULATIONS:Incremental revenue (60,000$90)$5,400,000

Less: Incremental costs (60,000$81)4,860,000

Incremental profit$540,000

WHERE ARE THEY GETTING 81$ PER UNIT COST WHEN IT'S 87$?