One Direction Company produces compasses for cross-country skiing. The production capacity is 45,000 compasses, and the company is currently operating at 85% capacity. Variable manufacturing costs are $10 per unit. Fixed manufacturing costs are $425,000. The compasses are normally sold directly to Outdoor Tent City at $25 each. One Direction has an offer from Northern Star Company (a foreign wholesaler) to purchase an additional 5,000 compasses at $13 per unit.

Required:

a. Does One Direction still have enough capacity to receive the offer from Northern Star? Support your answer with calculation.

b. Evaluate whether One Direction should accept the special order from Northern Star. Support your answer with calculation.

c. If Northern Star ordered 7,000 compasses (instead of 5,000 compasses), explain how your answer in part (b) would change (provide qualitative/ narrative answer only, no calculations are needed).