Ghangi Manufacturing Company Has the Following Unit Manufacturing Cost for Products

Essay

Ghangi Manufacturing Company has the following unit manufacturing cost for products currently sold to outside customers: A special order for 3,000 units has been received from a foreign company. The unit price requested is $65. The normal unit price is $90. If the order is accepted, unit variable costs will increase by $2 for additional shipping costs and since the company currently does not have sufficient excess operating capacity, an additional fixed cost of $10,000 would have to be incurred to lease additional production space without affecting present sales to outside customers. If the order is accepted, what will the differential operating income or loss be?