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Waterways mass produces a special connector unit that it normally sells...

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Accounting

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Waterways mass produces a special connector unit that it normally sells for $3.60. It sells approximately 37,000 of these units each year. The unit variable costs are $2.30. A company in Canada that has been unable to produce enough of a similar connector to meet customer demand would like to buy 14,300 of these units at $2.60 per unit. The production of these units is near full capacity at Waterways, so to accept the offer from the Canadian company would require temporarily adding another shift to its production fine. To do this would increase unit variable manufacturing costs by $0.30. However, unit variable selling costs would be reduced by $0.20. An irrigation company has asked for a special order of 1,800 of the connectors. To meet this special order. Waterways would not need an additional shift and variable selling costs would not be reduced. The irrigation company is willing to pay $3.10 per unit. (a) What are the consequences of Waterways agreeing to provide the 14,300 units to the Canadian company? Would this be a wise "special order' to accept? Waterways accept the special order because net income

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