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Tep Save & Exit A good customer, Texaco Ltd has asked the John Derre Company to fill a special order for 2600 units of product Gator47 at a price of $34 per unit John Derre will have to slightly modify product Gator47 for the special order. Product Gator47's normal unit product cost is $1910 as shown below Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost $ 5.00 5.00 2.10 7.00 $19.10 You have investigated John Derre's data and found the following facts: (1) the special order would have no effect on the company's total fixed manufacturing overhead costs and (2) direct labor is a variable cost. Texaco, the customer, would like modifications made to product Gator47. Those modifications would increase the variable costs of a Gator 47 by $150 per unit and that would require an investment by John Derre of $18,000.00 in special equipment that would have no salvage value. You have also found that this special order would have no effect on the company's other sales. The company also has ample spare capacity for producing the special order. The annual financial advantage disadvantage) for the company as a result of accepting this special order should be Multiple Choice 1 Multiple Choice o $35,040 o (317700) o $18, 200 o ($2,400)

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