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Power Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 70,000 units per month is as follows: Direct materials Direct Labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling & administration Fixed selling & administration $29.60 $ 5.80 $ 2.50 $17.20 $ 1.80 $ 6.70 The normal selling price of the product is $72.90 per unit. An order has been received from an overseas customer for 2,000 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 $1.10 less per unit on this order than on normal sales. Required: 6. Suppose the company plans on producing and selling 65,000 units next month not including the units required by the overseas customer. The special discounted price on the special order is $66.10 per unit. By how much would this special order increase (decrease) the company's operating income for the month if it was accepted? (ii) Do you recommend that they accept or reject the special order? Why or why not? (iii) Instead, suppose there is enough idle capacity to produce only 1,000 units of the 2,000 units requested by the overseas customer. Therefore, if the company decides to accept the special order it will have to give up 1,000 units of regular sales. By how much would this special order increase (decrease) the company's operating income for the month if it was accepted? (iv) Do you recommend that they accept or reject the special order? Why or why not

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