Carlsbad Enterprises has a capacity to produce 400,000 computer cases per year. The company is currently producing and selling 320,000 cases per year at a selling price of $399 per case. The cost of producing and selling one case follows:

Variable manufacturing costs	$	163
Fixed manufacturing costs		42
Variable selling and administrative costs		80
Fixed selling and administrative costs		21
Total costs	$	306

The company has received a special order for 30,000 cases at a price of $250 per case. Because it does not have to pay a sales commission on the special order, the variable selling and administrative costs would be only $52 per case. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations:

Selling price per case	$	250
Variable manufacturing costs		163
Fixed manufacturing costs		42
Variable selling and administrative costs		52
Fixed selling and administrative costs		21
Net loss per case	$	(28	)

Required:

a.	Compute the differential profit/loss if the order is accepted.(Enter your answers in thousands of dollars.)

	status quo 320000 units	alternative 350000 units	difference	higher/lower/none
sales revenue
variable costs:
manufacturing
selling and admin
contribution margin
fixed cost
operating profit

b.

From an operating profit perspective for the current year, do you agree with the decision to reject the special order?

	Yes
	No