Utrecht umbrellas makes several varieties of umbrellas. It has been approached by the European Accounting Association (EAA) about producing a special order of a black umbrella with their logo to be delivered to participants in the annual meeting. The EAA has offered to buy 1,500 umbrellas at a price of $11 each. Utrecht currently has the excess capacity necessary to accept the offer. The following information is related to the production of the umbrella: Direct materials $ 5.00 Direct labor 2.00 Variable manufacturing overhead 3.50 Fixed manufacturing overhead 2.50 Total cost $ 13.00 Regular sales price $ 19.00

Required:

1. Compute the incremental profit (or loss) from accepting the special order.

2. Should Utrecht accept the special order?

3. Suppose that the special order had been to purchase 2,000 umbrellas for $9.00 each. Recompute the incremental profit (or loss) from accepting the special order under this scenario.

4. Assume that Utrecht is operating at full capacity. Calculate the special-order price per unit at which the company would be indifferent between accepting or rejecting the special order.