4.Westman Industries Ltd. manufactures commercial linens for hotels and similar entities.It has been contacted by prospective customer that is outside its normal trading area, due to a strike by the employees of the major commercial linen manufacturer in that region.The customer wants to purchase 200 queen size bedspreads for its new hotel opening shortly.While the normal selling price for the chosen style is $170.00 per bedspread, the prospective customer wants a purchase price of $100.00 per bedspread.The following information is available regarding the standard cost to manufacture one queen size bedspread in the chosen style:

Direct materials2.0 metres @ $26/metre$52.00

Direct labour.75 hours @ $12/hour$9.00

Variable manufacturing overhead.75 hours @ $30/hour$22.50

Fixed manufacturing overhead.75 hours @ $ 50/hour$37.50

Variable selling expenses5% of selling price

Fixed selling expenses$6.00

Fixed manufacturing is allocated on the basis of direct labour hours, as is variable manufacturing overhead.As the prospective customer has approached Westman directly, the selling commission of 5% will not have to be paid to any salesperson.The prospective customer requires that the bedspreads be embroidered with their logo.Due to the large size of the logo, Westman Industries will have to purchase a special die for their equipment, at a cost of $1,000.In addition, this is expected to increase the direct labour by .25 hours per bedspread.The factory currently has excess capacity and can produce this order without disrupting production on other orders.

Required:(total marks = 9)

7a) Should Westman Industries Ltd. accept this special order?Support your answer with the relevant calculations.

2b) What qualitative considerations are relevant to this decision?