Green Grow Inc. (GGI) manufactures lawn fertilizer. Because of the product’s very high quality, GGI often receives speci

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Green Grow Inc. (GGI) manufactures lawn fertilizer. Because of
the product’s very high quality, GGI often receives special orders
from agricultural research groups. For each type of fertilizer
sold, each bag is carefully filled to have the precise mix of
components advertised for that type of fertilizer. GGI’s operating
capacity is 30,000 one-hundred-pound bags per month, and it
currently is selling 28,000 bags manufactured in 28 batches of
1,000 bags each. The firm just received a request for a special
order of 6,600 one-hundred-pound bags of fertilizer for $170,000
from APAC, a research organization. The production costs would be
the same, but there would be no variable selling costs. Delivery
and other packaging and distribution services would cause a
one-time $4,500 cost for GGI. The special order would be processed
in two batches of 3,300 bags each. (No incremental batch-level
costs are anticipated. Most of the batch-level costs in this case
are short-term fixed costs, such as salaries and depreciation.) The
following information is provided about GGI’s current
operations:
No marketing costs would be associated with the special order.
Because the order would be used in research and consistency is
critical, APAC requires that GGI fill the entire order of 6,600
bags.
Required:
1. What is the total cost of filling this special sales order,
including all relevant costs and opportunity costs?
2. What would be the change in operating income if the special
order is accepted?
3. What is the break-even selling price per unit for the special
sales order (i.e., what is the selling price that would result in a
zero effect on operating income)?
I will rate! Thank you