The Immanuel Co has just obtained a request for a special order of 6,000 bins to

be shipped at the end of the month at a selling price of $8 each. The company

has the capacity to produce 80,000 bins per month. Fixed production costs are

$128,000 per month, and the company currently sells 75,000 bins at $12 each

based on the following unit costs:

Variable production cost $4.60

Fixed production costs 1.50[Based on capacity]

Variable selling expense 1.00

If the special order is accepted, the company will avoid the selling expenses, but

shipping costs will be $0.30 per unit will have to b\e added.

Required:

1. List 4 issues that should be considered before accepting or rejecting this order
2. If Immanuel accepts the special order what will be the increase in monthly net

operating income?

3. What is the lowest price Immanuel should accept on this special order without

losing money

4. If Immanuel had regular sales of 71,000 bins per month, what would be the

change in monthly operating income if it accepted the special order?