54 Question 3 55 56 57 58 59 60 61 62 Manufacturing Winner Inc. manufactures athletic medals. It has capacity to produce 2,500 medals a month, but its current production is 1,875 medals. It nows has the chance to get full production with an order for 625 medals. Variable and fixed costs for the current level of 75% of capacity are as follows: Production Costs (at 75% of capacity--1,875 medals) Variable costs: Direct labour $ 281,250 63 Direct materi 196,875 64 65 66 67 68 69 Marketing Total variable costs Fixed costs Manufacturing Marketing 140,625 $ 618,750 $ 206,250 131,250 70 Total fixed costs 71 Total costs $ 337,500 $ 956,250 72 73 2 3 Variable cost per unit $ 330 74 Fixed cost per unit 180 75 Average unit cost $ 510 27 76 77 78 79 80 28 81 Winner Inc. has just received a special one time order for 625 medals at $300 per medal. For this particular order, no variable marketing costs will be incurred. However, a special machine will be required for this order, which will cost $20,000 and have no salvage value at the end of the order. 82 Required If the order is accepted, how much will the income change? 8,125 83