1. Waterloo Co. sells product P-14 at a price of $48 a unit. The per-unit cost data are direct materials $15, direct labour $10, and overheads $12(75% variable). Waterloo Co. has sufficient capacity to accept a special order for 40,000 units, but a discount of 25% from the regular price. Selling costs associated with this order would be $3 per unit.

Determine whether Waterloo Co. should accept the special order.