Use the following information to answer Questions 22 and 23.

Bright Lights, Incorporated produces a light fixture with the following full product cost (at 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 Bright Lights, so the direct materials cost per unit would be only $8. Because Bright Lights would not have to pay sales commissions on the order, the variable selling expenses would be just $1 per unit for shipping costs.

22. By how much will Bright Lights profits change if the order for 25,000 units is accepted? Show computations to support your answer, being certain to indicate whether profits would increase or decrease.

23.Assume all facts as presented above. If the order required Bright Lights to invest in special tooling that cost $60,000, what is the minimum unit sales price that Bright Lights would be willing to accept for the special order? Show calculations to support your answer. (Assume that the tooling has no alternative uses and will be discarded after the order is completed.)