XEROX Technology sells portable gaming tablets for $55 per unit. Unit product costs are:

Direct materials $15

Direct labor 20

Manufacturing overhead 3

Total$38

A special order to purchase 15,000 tablets has recently been received from another company and XEROX Technology has idle capacity to fill the order. XEROX Technology will incur an additional $1.60 per tablet for additional labor costs due to a slight modification the buyer wants made to the original product. Twenty percent of the manufacturing overhead costs is fixed and will be incurred no matter how many units are produced. Allocated costs for any order are $1 per unit.

Required:

a) Which of the data above should be ignored in making the special-order decision? For what reason? (2 marks)

b) When negotiating the price, what is the minimum selling price that XEROX Technology should accept for this special order? (3 marks)

c) What qualitative factors must XEROX Technologyconsider before accepting this special-order?