Indigo Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 3,200 machine hours. Prices and costs for each product are as follows:

Widget

Gadget

Selling price per unit

$262 $352 Variable costs per unit

Direct materials

33 57 Other direct costs

13 34 Variable Manufacturing overhead costs*

52 66

* Variable manufacturing overhead costs are applied at a rate of $62 per machine hour.

Handley Industries, a potential client, has offered $272 per unit to Indigo for 272 special units. These 272 units would incur the following production costs and time:

Direct materials $10,222 Other direct costs $5,200 Machine hours 247 Assume that Indigo has enough excess capacity to produce the special order. Calculate what the total contribution would be if the special order from Handley were accepted.

Total contribution margin $enter the total contribution margin in dollars Assume that Indigo is currently operating at full capacity. Calculate the contribution margin per unit and per machine hour. (Round machine hours to 2 decimal places, e.g. 12.25 and final answers to 0 decimal places, e.g. 125.)

Widget

Gadget

New Order

CM per unit

$enter a dollar amount $enter a dollar amount $enter a dollar amount CM per machine hour

$enter a dollar amount $enter a dollar amount $enter a dollar amount

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

Indigo select an option shouldshould not produce the units for the special order instead of widget or gadget units. Assume that Indigo is actually operating at 95% of full capacity. Calculate what the opportunity cost would be if Handleys special order were accepted.

Opportunity cost $enter the opportunity cost in dollars Assume that Indigo is actually operating at 95% of full capacity, and additional machines can be rented at a cost of $37,200 to produce Handleys special order. If the special order is accepted, calculate its effect on Indigos profit.

Net profit from doing the special order $enter the net profit from doing the special order in dollars