Manawatu Furniture Ltd is approached by Ms. Jenny Zhang, a new customer, to fulfil one-time-only special order for a cabinet similar to one offered to regular customers, at a quantity of 50 and a selling price of $600. The following per unit data apply for sales to regular customers:

Direct materials $150

Direct labour 125

Variable manufacturing support 80

Fixed manufacturing support 75

Total manufacturing costs 430

Markup (60%) 258

Targeted selling price $688 (This is the actual selling price to existing customers)

Manawatu Furniture Ltd has excess capacity to make this cabinet. Ms. Zhang wants the cabinets in cherry rather than oak, so direct material costs will increase by $50 per unit.

a. What are the relevant costs to consider when making the decision to accept the special order?

b. What is the difference in operating profits if the one time only special order for the 50 cabinets is accepted?

c. Should Manawatu accept the special order? Explain showing your workings

d. Other than price, what other non-financial items should Manawatu Furniture Ltd consider before accepting this one-time-only special order?

e. How would the analysis differ if there was limited capacity? Should they still accept this order?