Alexon SL is an electronics business with eight product lines. Profit data for one of the products (XT-107) for the month just ended (June 2008) are as follows:

Xuclà Mecàniques Fluvià SA, an instruments company, has a problem with its preferred supplier of XT-107 component products. This supplier has had a three-week strike and will not be able to supply Xuclà 3000 units next month. Xuclà approaches the sales representative, Angela Zamora, of Alexon SL about providing 3000 units of XT-107 at a price of ‚¬80 per unit. Zamora informs the XT-107 product manager, Francisco García-Salve, that she would accept a flat commission of ‚¬6000 rather than the usual 15% if this special order were accepted. Alexon has the capacity to produce 300 000 units of XT-107 each month, but demand has not exceeded 200 000 units in any month in the last year.
Required
1. If the 3000-unit order from Xuclà is accepted, what will be the effect on monthly operating profit? (Assume the same cost structure as occurred in June 2008.)
2. Francisco ponders whether to accept the 3000-unit special order. He is afraid of the precedent that might be set by cutting the price. He says, 'The price is below our full cost of ‚¬95 per unit. I think we should quote a full price, or Xuclà will expect favoured treatment again and again if we continue to do business with them.' Do you agree with Francisco? Explain.

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Sales, 200 000 units at average price of E100 20000000 Variable costs Direct materials at 35 per unit Direct manufacturing labour at 7 000000 2000000 1000000 10 per unit Variable manufacturing overhead at 5 per unit Sales commissions at 15% of sales Other variable costs at 3000000 5 per unit 1000000 Total variable costs Contribution margin Fixed costs Operating profit 14000000 6000000 5000000 1 000000