Incremental Approach* Part A has already been completed (answers shown) need help with Part B

Question 1: Special order Sales volume in units 100 $8,000 Revenue Variable costs $1,000 Contribution margin $7,000 Fixed costs $1,400 Profit $5,600 Special order: A client wants to buy 10 units at a discounted price of $20 per unit. This is a one-time deal (i.e., a short-term decision). You have enough spare capacity to fulfill this special order without cutting back on your regular sales. a) Use the gross approach to decide whether you should take the special order: status quo (no special order) total amounts after adding the special order Revenue $8,000 8200 Variable costs $1,000 1100 Contribution margin $7,000 7100 Fixed costs $1,400 1400 Profit $5,600 5700 Should you take the special order? Why? O YES the profit is higher with the special order ONO - the low price for the special order reduces the contribution margin OYES -the profit is positive with the special order b) Use the incremental approach to decide whether you should take the special order. how much each amount changes after adding the special order Incremental revenue Incremental variable costs Incremental contribution margin Incremental fixed costs Incremental profit Should you take the special order? Why? OYESthe total profit is positive the incremental profit is lower than the original profit NO YES the incremental profit is positive