answer question 4 (A-E)

4. (15 points). Megeve Company manufactures surfboards and its manufacturing equipment has a production capacity of 800 surfboards per month. Megeve currently anticipates a monthly demand of 650 surfboards at $900 per surfboard. Cost information for the current expected activity level is as follows: Revenues (650 units x $900) Variable manufacturing costs per unit Fixed Manufacturing costs per unit Variable SG&A costs per unit Fixed SG&A costs per unit $585,000 340 120 90 80 The SG&A costs include $20 of variable marketing costs per unit and $15 of fixed marketing costs per unit. Megeve has received a one-time special order of 100 surfboards from Waves Inc. for $550 per surfboard. Special stamping equipment costing $5,000 to engrave Waves' beautiful logo would be needed to process the order; the equipment would be then discarded. No marketing costs will be necessary for the one-time special order. a) Should Megeve accept or reject Waves' special order? b) If Megeve accepted the offer, would profit increase or decrease and by what amount (explain your answer and show your calculation)? Assume now that Waves' special order is for 250 surfboards and that it is an "all or nothing" offer. c) Should Megeve accept or reject Waves' special order? d) If Megeve accepted the offer, would profit increase or decrease and by what amount? Explain your answer and show your calculation. e) If your answers to parts c and d differ than those for parts a and b, what cost is causing that difference? What is the amount of that cost