Uncle Eddie's Knapsack Ltd$.,$ a manufacturing company located in Dubusque, Iowa,

produces a line of designer pink knapsacks bearing the very popular Hello Kitty logo$.$ They

would normally sell these knapsacks for $$60$ each. The unit$-$level cost data for these

knapsacks are as follows:

Hello Kitty Knapsack Costs $($per unit$)$

A Girl Scout troop in Philadelphia, PA$,$ would like to make a one$-$time special order for $3,000$ of

these knapsacks. They have offered to pay $$40\mathrm{.}50$ per knapsack. That price includes additional

personalized stitching which would cost the company $$2$ per knapsack in additional materials

and $$3$ per knapsack in additional labor. Taking the special order would also require the

purchase of a new machine for performing personalized stitching that will have no other use after

the special order has been completed. This machine will cost the company $$10,000$ to purchase.

Variable selling expenses consist of commissions which will be paid to the salesperson who

generated this order. This order would have no effect on the company's regular sales and the

order could be fulfilled using the company's existing capacity without affecting any other order.

$2\mathrm{.}1$ Evaluate the impact that accepting this special order will have on the company's net

operating income. Should the special order be accepted at this price?

$2\mathrm{.}2$ Assuming that the order size remains $3,000$ knapsacks, what is the minimum per$-$unit

price the company should be willing to accept for this order?