Nardin Outfitters has a capacity to produce 15,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,200 per tent. The cost of producing and selling one tent follows:

Variable manufacturing costs $500

Fixed manufacturing costs $120

Variable selling and administrative costs $110

Fixed selling and administrative costs $80

Total costs$ 810

The company has received a special order for 1,100 tents at a price of $660 per tent from Chipman Outdoor Center. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $51 per tent. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations:

Selling price per case $660

Variable manufacturing costs $500

Fixed manufacturing costs $120

Variable selling and administrative costs $51

Fixed selling and administrative costs $80

Net profit (loss) per case $(91)

Required:

a. What is the impact on profit for the year if Nardin Outfitters accepts the special order?

b. Do you agree with the decision to reject the special order?

What is the impact on profit for the year if Nardin Outfitters accepts the special order? (Enter your answers in thousands rounded to 1 decimal place. (i.e., 5,400,400 should be entered as 5,400.4). Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.)

(All revenues and costs in $000)DifferenceStatus Quo 5000 UnitsAlternative 6100 UnitsSales revenue Variable costs: Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit