Nardin Outfitters has a capacity to produce 16,000 of their special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $1,300 per tent. The cost of producing and selling one tent follows:

Variable manufacturing costs	$ 520
Fixed manufacturing costs	130
Variable selling and administrative costs	120
Fixed selling and administrative costs	90
Total costs	$ 860

The company has received a special order for 1,300 tents at a price of $680 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 $53 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	$ 680
Variable manufacturing costs	520
Fixed manufacturing costs	130
Variable selling and administrative costs	53
Fixed selling and administrative costs	90
Net profit (loss) per case	$ (113)

Required:

a. What is the impact on profit for the year if Nardin Outfitters accepts 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)		Difference
	Status Quo 5000 Units	Alternative 6300 Units
Sales revenue
Variable costs:
Manufacturing
Selling and administrative
Contribution margin
Fixed costs
Operating profit

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