Aurora Company manufactures and sells a single product, the gadget. Operating at capacity, the company can produce and sell 30,000 gadgets per month. Cost associated with this level of production and sales are as follows: Direct materials $450,000 Direct labour 240,000 Variable overhead 90,000 Fixed overhead 270,000 Variable selling expense 120,000 Fixed selling expense 180,000 Gadgets normally sell for $50.00 each. Fixed manufacturing overhead is constant, on a monthly basis, within the production range of 20,000 to 30,000 gadgets per month. Required: 1. Aurora currently sells 25,000 gadgets per month. A large retail chain has offered to purchase 5,000 gadgets but at price that is 16% below the regular price. There would be no sales commission paid on this special order, which will reduce the variable selling expense by 75%. Aurora would need to lease a special machine to engrave the retail chain's name on to the gadget. The cost of this machine is $10,000 per month. There is no guarantee that any further sales orders will be received from this company. Determine the incremental income that this order would generate. Should Aurora accept the order? 2. Refer to the original data. The provincial government would like to purchase 5,000 gadgets on a one-time only basis. The government is willing to pay a fee of $1.80 per gadget, and it would reimburse Aurora for the full manufacturing cost of making the 5,000 units. There will be no variable selling expenses associated with this order. Determine the incremental income that this order would generate. Should Aurora accept the order? 3. Assume the same situation as in part 2, except that the company is currently selling 30,000 gadgets per month. The government order must be accepted in whole or not at all. What is the impact on operating income if the order is accepted