Coats Inc. received at order for 1,000 units from a new customer and they have idle capacity enough to make these units without interfering with normal orders. They are willing to pay $20 per unit. The manufacturing costs for the recent period shows:
|Manufacturing costs of 100,000 parts:|
|Variable Manufacturing Overhead||\$500,000|
|Fixed Manufacturing Overhead||\$1,000,000|
The shipping costs are estimated to be \$2.00 per unit and the sales commission, normally 12% of sales would be 10% of sales.
What is the impact on Coat's profits if they accept and make this order?