Use the following to answer the next two questions:

Bremer Company is considering whether it should produce 4,000 units requested in a special order from a customer. The company has the capacity to produce the additional units without cutting into its existing sales. Bremer estimates the following costs to produce one unit:

Direct material $4.00

Direct labor 3.00

Variable Mfg. Overhead .50

Fixed Mfg. Overhead 2.00

The special order calls for a selling price of $8.00 per unit; the normal selling price is $15.00 per unit.

Part One

If Bremer takes the special order, how will it impact the company s income?

	a.	no effect
	b.	increase of $2,000
	c.	increase of $4,000
	d.	decrease of $6,000

Part Two

At what selling price is Bremer indifferent about taking the special order?

	a.	$7.00
	b.	$7.50
	c.	$8.00
	d.	$9.00