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Glade Company produces a single product. The costs of producing and selling a single unit...

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Accounting

Glade Company produces a single product. The costs of producing and selling a single unit of this product at the company's current activity level of 8,000 units per month are:

Direct materials

$2.50

Direct labor

$3.00

Variable manufacturing overhead

$0.50

Fixed manufacturing overhead

$4.25

Variable selling and administrative expenses

$1.50

Fixed selling and administrative expenses

$2.00

The normal selling price is $15 per unit. The company's capacity is 10,000 units per month. An order has been received from a potential customer overseas for 2,000 units at a price of $12.00 per unit. This order would not affect regular sales. Required:

Should Glade accept the offer? If the order is accepted, by how much will monthly profits increase or decrease?

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