Case #2 Inland Inc. manufacturers one product, the FL-95, for which the following information has been gathered: Cost per unit Direct materials Direct labour Variable overhead Fixed overhead Total cost per unit Selling price Units produced and sold FL-95 90.00 120.00 150.00 120.00 $480.00 $600.00 1,500 On average, manufacturing workers earn a wage rate of $20 per hour. Currently, the plant has capacity for 10,500 direct labour hours, however, only 9,000 hours are currently being used. If needed, the company can hire additional workers up to its capacity of 10,500 direct labour hours. 2 Required (A) A new customer has approached the company looking to buy 250 units of the FL-95 at a selling price of $450 per unit. Does the company have sufficient capacity to accept the order? (B) How much will profit increase or decrease if the company accepts the special order? (C) Suppose, instead, that the customer has requested 350 units and accepting the order means that the company must deny sales of some units to its usual customer. That is, the company is unable to temporarily increase capacity beyond 10,500 direct labour hours. If the company accepts the order, by how much would income increase or decrease? (D) What non-financial factors should management consider before deciding whether the company should accept the one-time-only special order? (E) Suppose, instead, that the company could approve manufacturing overtime to temporarily increase capacity beyond 10,500 direct labour hours and, therefore, would be able to sell 1,500 units to its usual customers and accept the order from the new customer. In doing so, for hours worked in overtime, the average wage rate would increase to $30 per hour and variable overhead costs would increase by 50%. If the company accepts the special order of 350 units, by how much would income increase or decrease?