Special Order Marshall Company recently approached Johnson Corporation regarding manufac- turing a special order of 4,000 units of product CRB2B. Marshall would reimburse Johnson for all variable manufacturing costs plus 35 percent. The per-unit data follow:
Unit sales price
$28
Variable manufacturing costs
13
Variable marketing costs
5
Fixed manufacturing costs
4
Fixed marketing costs
2
Johnson would have a retooling cost of $12,000 for the special order. Johnson has no alternative use of capacity.
Required Should the special order be accepted?