44. Special Order Decision with Idle Capacity and at Full Capacity. The following quarterly financial data are for Pneumatic, Inc., a maker of compressors. On average, Pneumatic makes 20,000 compressors each quarter.

Pneumatic received an offer from a one-time customer to purchase 5,000 compressors this coming quarter for $275 per unit. Pneumatic can produce up to 30,000 units a quarter, so the special order would not affect regular customer sales. Variable costs per unit will remain at $100. This special order will have no effect on fixed costs.

1. Using the differential analysis format presented in Figure 4.12 Special Order Differential Analysis for Tonys T-Shirts, determine whether Pneumatic would be better off rejecting the special order (Alternative 1) or accepting the special order (Alternative 2).
2. Summarize the result of accepting the special order using the format presented in Figure 4.13 Summary of Differential Analysis for Tonys T-Shirts.
3. Assume Pneumatic is approached with the same special offer, but has limited capacity, and can only produce up to 20,000 units per quarter. Thus any special orders will result in reduced sales to regular customers. Using the differential analysis format presented in Figure 4.12 Special Order Differential Analysis for Tonys T-Shirts, determine whether Pneumatic would be better off rejecting (Alternative 1) or accepting (Alternative 2) the special order.
4. Summarize the result of accepting the special order in requirement c using the format presented in Figure 4.13 Summary of Differential Analysis for Tonys T-Shirts.