Melissa has created a successful business manufacturing and selling Sparkles, a high-end stuffed unicorn toy for young children. She sells them to department stores for $50 each. Current manufacturing capacity is 20,000 unicorns per year. Costs to manufacture and sell each stuffed animal are as follows:

Direct materials . . . . . . . . . . . . . . . . . . $ 5.50
Direct labour . . . . . . . . . . . . . . . . . ..... . . 7.00
Variable overhead . . . . . . . . . . . . . . .. . 10.00
Fixed overhead . . . . . . . . . . . . . . . . ... . 12.00
Variable selling expenses . . . . . . . .... . . 3.00

Melissa is currently manufacturing and selling 20,000 unicorns per year. A British department store has contacted Melissa with a one-time offer to buy 2,000 units. The store wants its own label attached to each stuffed toy, which will add $0.50 per unit to the costs of manufacturing. No selling expenses need be incurred on this transaction.

Required:

1. Determine the per-unit opportunity cost of selling to the British department store.

2. Determine the minimum selling price that Melissa should set.

3. Discuss briefly two of the qualitative factors Melissa should consider in making the decision to accept or reject this offer.