_{Latika Inc. has the following information:}

• _{Sell price: $6.00/unit}
• _{Variable cost: $3.50/unit}
• _{Fixed cost: $17,000}
• _{Operating capacity: 18,000 units}
• _{Full capacity: 30,000 units}

_{If they operate above 20,000 unit capacity, their fixed cost will increase by 50%.}

_{Molino Ltd. approached Latika and ordered 7,000 units with the following conditions:}

• _{Molino will receive 25% discount per unit.}
• _{Molino will provide some raw materials & will pay for the shipment. This will result into a $0.25 variable cost savings for Latika.}

_{How much is Latika's profit before accepting the special order?}

Question 36 options:

	$25,000
	$45,000
	$30,000
	$28,000

Question 37 (1 point)

_{Latika Inc. has the following information:}

• _{Sell price: $6.00/unit}
• _{Variable cost: $3.50/unit}
• _{Fixed cost: $17,000}
• _{Operating capacity: 18,000 units}
• _{Full capacity: 30,000 units}

_{If they operate above 20,000 unit capacity, their fixed cost will increase by 50%.}

_{Molino Ltd. approached Latika and ordered 7,000 units with the following conditions:}

• _{Molino will receive 25% discount per unit.}
• _{Molino will provide some raw materials & will pay for the shipment. This will result into a $0.25 variable cost savings for Latika.}

_{What will happen to Latika's total fixed cost if the order is accepted?}

Question 37 options:

	Increase by $8,500
	Decrease by $8,500
	Decrease by $8,750
	Increase by $8,750

Question 38 (1 point)

_{Latika Inc. has the following information:}

• _{Sell price: $6.00/unit}
• _{Variable cost: $3.50/unit}
• _{Fixed cost: $17,000}
• _{Operating capacity: 18,000 units}
• _{Full capacity: 30,000 units}

_{If they operate above 20,000 unit capacity, their fixed cost will increase by 50%.}

_{Molino Ltd. approached Latika and ordered 7,000 units with the following conditions:}

• _{Molino will receive 25% discount per unit.}
• _{Molino will provide some raw materials & will pay for the shipment. This will result into a $0.25 variable cost savings for Latika.}

_{Should Latika accept the special order? Why?}

Question 38 options:

	No, because the profit will decrease by $250.00
	Yes, because the profit will increase by $250.00
	Yes, because the profit will increase to $31,500
	No, because the profit will decrease by $10,500