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Lambo Ltd produces engines for business across the world. Lambo's production capacity is 80,000 engines per year and is currently operating at 80% capacity. The
Lambo Ltd produces engines for business across the world. Lambo's production capacity is 80,000 engines per year and is currently operating at 80% capacity. The following summary data is provided for Lambo product: Selling price per unit Variable manufacturing costs per unit Fixed manufacturing costs $10,500 $4,400 $3,500,000 AMW, one of the world's largest car manufacturer, place a special order to Lambo Ltd to purchase an additional 15,000 engines at $8,200 per unit. Required (please show all workings): Calculate the contribution margin (per unit) for both the current production of engines and the special order. Please show all workings. If this special order is accepted, how much is the opportunity cost? Please provide a rationale for your answer. Please show all workings. Should the special order be accepted? If accepted, how much more profit (or loss) will Lambo Ltd report as a result of the special order? Please show all workings
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