Question 1: Special Order (11 marks) 2 Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 60,000 units per year is: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed manufacturing overhead Fixed selling and administrative expense $ $ $ $ $ $ 5.10 3.80 1.00 1.50 Note 1 4.20 2.40 1 B Delta has provided the following additional information: Selling price to regular customers Maximum capacity in units Current production level in units (normal activity level) $ 21.00 70,000 60,000 A special order has been received with the following details: Units in special order Selling price to special order customer 15,000 $18.00 Note 1: There will be no variable selling costs incurred for the special order. Management has asked you for your assistance in deciding whether or not the special order should be accepted. Required: Calculate the following: Special Order Customer Regular Customer a. Variable cost per unit b. Contribution margin per unit Using your answers to part a and b, calculate the following: c. If the company decides to take on the special order, how many units will they NOT be able to sell to their regular customers? d. Total Contribution margin earned from special order (for the entire special order) e. Opportunity cost (if any) - show as positive number f. Increase (decrease) in operating income g. Should the special order be accepted based on quantitative factors? h. Why or why not? (1 mark) A B h. Why or why not? (1 mark) i. Name one qualitative factor that management should consider prior to accepting a special order? (1 mark) END OF QUESTION 1