VIDVIO is a manufacturer of phone cases. Below are

excerpts from the company's income statement for its latest

year-end (2020), the manufacturing cost are as follows::

Utilities (Fixed) $20,000

Utilities - Variable 80.000

Equipment

Building

Direct Labor

100.000

123.000

75.000

50.000

Insurance

Direct Materials 150.000

VIDVIO does not report an opening inventory. During

2018, the company manufactured 1,000,000 phone cases

and reported total manufacturing costs of $598,000 (around

$0.60 per phone case).

VIDVIO recently received a special order for 1,000,000

phone cases at a total price of $400,000. Despite having

ample capacity, the manager is reluctant to accept this

special order because it is below the cost of $598.000 to

manufacture the initial 1,000,000 phone cases as outlined in

the company's income statement. Being the company's cost

accountant, the manager wants you to determine whether

the company should accept this order.

1 . absorption cost ?

2. Variables cost?