Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit.

Materials	$	36.00
Labor		14.00
Variable overhead		4.00
Fixed overhead ($1,800,000 per year; 100,000 units per year)		18.00
Total	$	72.00

Simpson Company has approached Andreasen with an offer to buy 7,500 thermostats at a price of $60 each. The regular price is $100. Andreasen has the capacity to produce the 7,500 additional units without affecting its current production of 100,000 units. Simpson requires that each unit use its branding, which requires a more expensive label, resulting in an additional $2 per unit material cost. The labor cost of affixing the label will be the same as for the current models. The Simpson order will also require a one-time rental of packaging equipment for $20,000.

Required:

a. Prepare a schedule to show the impact of filling the Simpson order on Andreasens profits for the year.

b. Do you agree with the decision to accept the special order?

c. Considering only profit, determine the minimum quantity of thermostats in the special order that would make it profitable, assuming capacity is available.

Prepare a schedule to show the impact of filling the Simpson order on Andreasen's profits for the year. (Enter your answers in thousands (i.e., 5,400,000 should be entered as 5,400). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) (All Costs in Thousands of Dollars) Status Alternative 107,500 Units Quo Difference 100,000 Units $ 10,450,000 Sales revenue higher 10,000,000 450,000 Less variable costs: 3,600,000 3,885,000 285,000 higher 105,000 higher 430,000 30,000 higher Materials 1,400,000 1,505,000 Labor Variable overhead 400,000 $ 420,000 highEr $ 30,000 $ 5,820,000 $ 5,400,000 Total variable cost Contribution margin Less: Fixed costs Operating profit (loss) higher higher $ 2,800,000 $ 2,810,000 $ 10,000 higher $ 4,600,000 $ 4,630,000 1,820,000 20,000 1,800,000 Required A Required B Required C Considering only profit, determine the minimum quantity of thermostats in the special order that would make it profitable, assuming capacity is available. units Quantity of thermostats