ACC – PowerDrive, Inc.,

| October 3, 2018

PowerDrive, Inc., produces a hard disk drive that sells for $175 per unit. The cost of producing 25,000 drives in the prior year was:Direct material $725,000Direct labor 475,000Variable overhead 225,000Fixed overhead 1,500,000Total cost 2,925,000At the start of the current year, the company received an order for 3,000 drives from a computer company in China. Management of PowerDrive has mixed feeling about the order. On one hand, they welcome the order because they currently have excess capacity. Also, this is the company’s first international order. On the other hand, the company in China is willing to pay $125 per unit.Question) What will the effect on profit of accepting the order?

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