A firm makes 395,000 motor bikes and sales at $25 each. Their last operating statement was as follows  Sales  2,600,000 Direct Materials 625,000 Direct Labour 850,000  Direct Expenses 445000  Fixed costs  650,000  A contract has been offered to sell an additional 150,000 thermostats at $18 each. Acceptance of this contract would increase fixed costs by $70,000 and would mean paying an overtime premium of 22% for the extra labour required. However because of bulk purchasing a discount of 6.5 % could be obtained for all material purchases. 

1. Calculate the contribution and net profit b. Prepare-a differential cost statement.