XXX makes high-end step ladders. Its budget is below, and your boss is not happy with the low operating margin. Current capacity is 1,000 ladders. A salesperson just came in with a one-time opportunity to sell 100 ladders for $70.00 per unit. Your bosses first reaction is, why would be sell a ladder for $70.00 when our current unit cost is $88.88/ladder? Operations has suggested that we can use a cheaper material thatll save $3.00/unit. And, since this is a one-time order, the inspection department says that we can skip final inspection thatll cost $2.00/unit. New tooling will be required that will cost $300. Manufacturing says that fixed overhead costs will not be affected by taking this order. What is your recommendation fully analyze and support. Make sure to assess qualitative factors.

Per unit Budget 850 Units Sales Direct material Direct labor Variable 0/H Fixed overhead Total cost Operating income Ol margin $80,000.00 $94.12 ($28,050.00) ($33.00) ($18,700.00) ($22.00) ($6,800.00) ($8.00) ($22.000.00) ($25.88) ($75.550.00) ($88.88) $4,450.00 $5.24 5.60% BUD-total plant capacity is 1,000 units