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  3. 1. amber grease manufacturing produces a single pr

1. Amber Grease Manufacturing produces a single product. The cost of producing and selling a...

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Accounting

1. Amber Grease Manufacturing produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows:

Direct materials $38.80

Direct labor (variable cost) $9.70

Variable manufacturing overhead $2.30

Fixed manufacturing overhead $18.10

Variable selling & administrative expense $1.70

Fixed selling & administrative expense $8.80

Normal selling price per unit $85.10

An order has been received from an overseas customer for 3,000 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $0.20 less per unit on this order than on normal sales.

Required: What are some of the issues other than capacity that Amber Grease should consider in determining the price per unit for the special order? Discuss at least 2 issues in detail.

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