Reference no: EM132836491

Lamont Industries has an annual plant capacity of 81,000 ?units; current production is 60,000 units per year. At the current production? volume, the variable cost per unit is $29.00 and the fixed cost per unit is $4.60. The normal selling price of Lamont?'s product is $50.00 per unit. Lamont has been asked by Dexter Company to fill a special order for 15,000 units of the product at a special sales price of $23.00 per unit. Dexter is located in a foreign country where Lamont does not currently operate. Dexter will market the units in its country under its own brand? name, so the special order is not expected to have any effect on Lamont?'s regular sales.

Problem 1: How would accepting the special order impact Lamont?'s operating? income? Should Lamont accept the special? order?

Problem 2: How would your analysis change if the special order sales price were to be $36.00 per unit and Lamont would have to pay an attorney a fee of $14,000 to make sure it is complying with export laws and regulations relating to the special? order?