The Wade Corporation has the capacityto produce 10,000 units per year. Its predicted operations for theyear are as follows:

Sales (8,000 units @ $25each)                      $200,000

Manufacturing costs:

Variable                                                        $8 per unit

Fixed                                                                $50,000

Marketing and administrativecosts:

Variable                                                        $1 per unit

Fixed                                                                $15,000

The accounting department has preparedthe following projected income statement for    the coming year for your use in makingdecisions.

Sales                                                                                              $200,000

Variable costs:

Manufacturing ($8 x8,000)                           $64,000

Marketing ($1 x8,000)                                     8,000                      72000

Contributionmargin                                                                      $128,000

Fixed costs:

Manufacturing                                             $50,000                       

Marketing                                                       15,000                      65,000

Operatingprofit                                                                               $63,000

Required:

1. Should the company accept a special order for500 units at a selling price of $10? Assuming that there are novariable marketing and administrative costs for this order and thatregular sales will not be affected, what is the impact of thisdecision on company profits?
2. Suppose there was a one-time setup fee of $2,000 for thepreceding order. Should the special order beaccepted? Why?
3. What other factors should be considered and how wouldthey impact your decision to accept the specialorder?