A kitchen-goods chain has offered to purchase 4,000 pots (one time in one month) if the sales price was lowered to $40 per pot. Panalon's maximum capacity is 7,000 units.

A) Based on the cost data provided, what would be the impact of the price decrease on sales, costs, and operating income if Panalon accepted this sale? Show a contribution margin income statement to show your results.

B) Do you think Panalon should accept this sale? Support your decision with evidence and analysis. Hint: Compare your contribution margin income statement including the special sale to the company's normal contribution margin income statement.

Each question refers to the same initial data. Treat each Part individually. Ignore income taxes. Assume no beginning or ending inventories. Calculations and backup should be completed and submitted in Excel. Use proper Contribution Income Statement formatting example below. Analysis can either be typed into cells in Excel [formatted to be easily legible] or typed into a text box in Excel. [This case study is worth 50 points total.:l Contribution Margin Format Example: Volume 5a les Variable Costs (listed) )(X Variable Cost: Total Contribution Margin Fixed Costs (listed) XX Fixed Costs Total DErating Income it? 22?} Data for all Questions: Wproduces cast irondmovens (a deep pot with a lid that can be used on a stovetop or in the oven]. Their pots are sold at many local department stores. The cost of manufacturing and marketing their pots, at their normal factory volume of 5,000 pots per month, is shown in the table below. These pots sell for $50 each. aw is making a small prot, but would pre'ferto increase protability. Hint: Fixed costs are shown on a perunit basis in the table based on normal volume. However, fixed costs as a total do not change when volume changes, so yoluwill need to determine total fixed costs rst. Per Unit Per Unit ' 3 Unit Manufacturing Costs: Variable Materials 5 10.00 Variable Labor 5 9.00 Variable Overhead 5 5.00 . Fixed Overhead 5 6.00 i : Total Unit Manufacturing Costs: 5 3000 Unit Marketing Cost: Variable Marketing Costs 5 4.00 Fixed Marketing Costs 5 8.00 Total Unit Marketing Costs: _ 5 12.00