Question 1: Sbitany company produces two types of chairs, the following represent the information related to those two products: Playground chairs School chairs Units produced 500 500 Selling price per unit 300 200 Variable cost per unit Direct material 40 30 Direct manufacturing labor 50 40 Variable advertising expense 10 5 Contribution margin per unit 200 125 Fixed cost per unit 75 50 Profit per unit $125 $75

A one-time customer comes to Sbitany company and offer to buy 200 playground chairs if Sbitany is able to reduce the playground chairs to a lower price than other companies. at this time Sbitany is operating 60% of its capacity and has the ability to produce the offer without affecting the production of other orders. It was also known that the one-time special order would have no variable advertising expense. Required: A. What is the minimum price that should be accepted? (show your calculation) B. in case that the customer has offered to pay the same regular price after 72% discount should Sbitany accept the order and what is the effect on pre-tax profit if the order is accepted? (solve this question using the table) C. Assume that Sbitany company is currently operating 100% capacity and in order to accept the order he will have to stop the production of another order from the same product. What is the minimum price that should be charged to the new order?