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The management team of Windsor Industries was evaluating its performance for the first half of the year. Production and sales of its fans were on

The management team of Windsor Industries was evaluating its performance for the first half of the year. Production and sales of its fans were on budget at 2,800 units to date, with the following income statement reflecting its income for the first half of the year.

Sales. $229,600

Variable Costs:

DM. $42,000

DL. $30,800

Variable-MOH. $8,400

Variable Selling. $8,400. $89,600

Contribution Margin. $140,000

Fixed Costs:

Fixed-MOH. $36,000

Fixed Selling. $101,000. $137,000

Operating Income (Loss). $3,000

Orders for the second half of the year were coming in slower than what the company had been expecting. When a new customer called and requested a special discount, the sales team listened.

(a) Assume the customer requests 215 units in the special order and offers $45 per unit. Since the customer came directly to the company, no variable selling cost will be incurred. How much better or worse off will Windsor Industries be if it accepts this special order, assuming it has enough idle capacity for the order?

(b) Assume instead that the customer requests 100 units in the special order and offers $41 per unit. Windsor management still believes there will be enough capacity to take on the special order. This time, however, variable selling costs will be incurred because the customer is working through a sales representative. How much better or worse off will Windsor Industries be if it accepts this special order?

(c)Assume instead the customer request 145 units and both a discounted price of $45 per unit and a customized version of the fan. In order to make the customized version, Windsor will need to purchase a special piece of equipment for$3030, but it will not incur any variable selling costs for this order. How much better or worse off will the company be if it uses its available capacity and accepts this special order?

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