Axia Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 1,000 machine hours. Prices and costs for each product are as follows:

		Widget		Gadget
Selling price per unit		$250		$330
Variable costs per unit
Direct materials		30		35
Other direct costs		10		12
Manufacturing overhead costs*		30		44

* Variable manufacturing overhead costs are applied at a rate of $40 per machine hour. Bromont Industries, a potential client, has offered $250 per unit to Axia for 250 special units. These 250 units would incur the following production costs and time:

Direct materials		$8,000
Other direct costs		$3,000
Machine hours		225

Assume that Axia has enough excess capacity to produce the special order. Calculate what the total contribution would be if the special order from Bromont were accepted.

Total contribution margin

$

Assume that Axia is currently operating at full capacity. Calculate the contribution margin per unit and per machine hour. (Round answers to 0 decimal places, e.g. 125.)

		Widget		Gadget		New Order
CM per unit		$		$		$
CM per machine hour		$		$		$

Determine whether Axia should produce the units for the special order instead of widget or gadget units.

Axia

shouldshould not

produce the units for the special order instead of widget or gadget units.

Assume that Axia is actually operating at 95% of full capacity. Calculate what the opportunity cost would be if Bromonts special order were accepted.

Opportunity cost

$

Assume that Axia is actually operating at 95% of full capacity, and additional machines can be rented at a cost of $35,000 to produce Bromonts special order. If the special order is accepted, calculate its effect on Axias profit.

Net profit from doing the special order

$