1. Company currently has the capacity to manufacture 250,000 widgets a year and 100,000 gadgets a year in its factory. Company has the following costs related to manufacturing and selling 200,000 widgets:

		Scenario 1	Scenario 2
Direct materials and direct labor	$840,000
Variable manufacturing overhead	$180,000
Rent on equipment only used for the widgets	$40,000
Allocated share of depreciation on factory	$100,000
Annual salary of widget production manager	$70,000
Variable selling costs (commissions)	$60,000
Allocated share of fixed selling costs	$80,000
Total	$1,370,000

1. Scenario 1: Assume Firm asks Company to manufacture a special order of 4,000 widgets. Indicate in the column labeled Scenario 1 whether each cost is relevant (R) or not relevant (NR) for this special order decision.

2. Scenario 2: Assume Company is considering outsourcing production of the widget product line. They would purchase the widgets from a supplier. The widget production manager will be laid off. Sales of the widget are expected to stay at 200,000 units. Indicate in the column labeled Scenario 2 whether each cost is relevant (R) or not relevant (NR) for making the decision to outsource the widget production.