Chairs Ltd. manufactures desk and ergonomic chairs and below is the per unit data:

	Desk Chair	Ergonomic Chair
Selling price	$199	$299
Direct materials	$50	$80
Direct labour at $25 per direct labour hour	$25	$50
Variable manufacturing overhead	$15	$30
Fixed manufacturing overhead	$50	$50

Required:

a)Chairs Ltd. has been approached by a new customer offering to purchase 4,000 units of ergonomic chairs at $220 per unit. If Chairs Ltd. accepts this order, it will need to spend an additional $50 per unit due to the additional features requested by the new customer. If the special order is accepted, the present sales and fixed overhead costs of Chairs Ltd. will not be affected. By how much will operating income increase or decrease if the special order is accepted? Should Chairs Ltd. accept or reject the special order? Please provide detailed calculations and explanations to support your answer.

b)Chairs Ltd. can sell the desk chair for $250 per unit if it spends another $52 per unit to upgrade the chair. If there is spare capacity, should Chairs Ltd. process the desk chair further? Please provide detailed calculations and explanations to support your answer.

c)Due to COVID-19 restrictions, Chairs Ltd. is experiencing a reduction in labour hours and only has 8,000 direct labour hours available for the period. According to the sales manager, the market demand for desk chairs is 4,000 units and ergonomic chairs is 6,000 units for the period. How many desk chairs and ergonomic chairs should Chairs Ltd. produce to achieve optimal product mix, and what will be the total contribution margin earned from the optimal mix? Please provide detailed calculations and explanations to support your answer.