predicted Riley Inc. has the capacity to produce 5,000 units per year. Its operations for the year are as follows: $80,000 Sales (4,000 units @ $20 each) Manufacturing costs: Variable Fixed Marketing and administrative costs: Variable Fixed $5 per unit $10,000 $1 per unit $8,000 The accounting department has prepared the following projected income statement for the coming year for your use in making decisions. $80,000 $20,000 4,000 Sales Variable costs: Manufacturing ($5 x 4,000) Marketing ($1 x 4,000) Contribution margin Fixed costs: Manufacturing Marketing Operating profit 24,000 $56,000 $10,000 8,000 18,000 $38.000 Required a) Should the company accept a special order for 500 units at a selling price of $9? Assuming that there are no variable marketing and administrative costs for this order and that regular sales will not be affected, what is the impact of this decision on company profits? b) Suppose there was a one-time setup fee of $1,000 for the preceding order. Should the special order be accepted? Why? c) What other factors should be considered and how would they affect your decision to accept the special order