Piper Rose Boutique has been contacted by the community college to make special polo shirts for faculty and staff. The university is willing to purchase 4,000 polo shirts of its own design for $6.00 each. The company normally sells its T-shirts for $12.00 each. The company has enough excess capacity to place this order. 

A breakdown of your costs is as follows: 

Direct materials $2.00 

Direct labor 0.50 

Variable costs 1.50 

Fixed costs _2.50 

Total cost per unit $6.50 

Should Piper Rose Boutique accept the special request made by the university? (Support your answer with a numerical analysis.)

Answer rating: 100% (QA)

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