Harper Manufacturing sells a single product for $60 per unit. At an operating level of 10,000 units, variable costs are $30 per unit and fixed costs are $17 per unit. Harper has been offered a price of $36 per unit on a special order of 3,000 units by Large Discount Stores, which would use its own brand name on the item. If Harper accepts the order, material cost will be $4 less per unit than for regular production. However, special stamping equipment costing $10,000 would be needed to process the order and the equipment would then be discarded. Required: a. Compute the increase (decrease) in Harper’s net income if the special order is accepted. b. What is the lowest price Harper would accept for this special order?
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