The Sharma Company has just obtained a request for a special order of 4,000 circuit boards to be shipped at the end of the month at a selling price of $5.75 each. The company has a production capacity of 90,000 circuit boards per month with total fixed production costs of $144,000. At present, the company is selling 80,000 circuit boards per month through regular channels at a selling price of $9.00 each. For these regular sales, the cost for one circuit board is:

Variable production cost $3.90

Fixed production cost 1.80

Variable selling expense 1.00

If the special order is accepted, Inman will not incur any selling expense; however, it will incur shipping costs of $0.45 per unit. In addition, the special order requires a one-time set-up of the manufacturing facility. The set-up would cost Inman $4,000.

Required:

Should Sharma accept the special order?