Questions 3 Special order A company manufactures 2 products: desks and chairs. It has a capacity of 2,000 machine hours per year. Prices and costs for each product are as follows: Desks Chairs Selling price per unit $250 $100 Variable costs per unit: Direct materials $50 $20 Other direct costs 10 4 Indirect manufacturing costs* 50 20 * Variable indirect manufacturing costs are applied at a rate of $40 per machine hour. Recently, a potential client offered the company $200 per unit to buy 500 units of special furniture. This order would result in the following production costs and machine hours used: Direct material costs $ 21,000 Other direct costs $ 4,000 Number of machine hours 375 Required 2 a. Assume that the company has enough excess capacity to produce the special order. Calculate the total contribution if the order was accepted. Show all your calculations. 5 b. Assume that the company is currently operating at full capacity. Determine whether the company should accept the special order and produce the special furniture instead of desks or chairs, and state your conclusion. 5 c. Assume that the company is actually operating at 96.25% of its full capacity. Calculate the opportunity cost if the special order was accepted. 4 d. Assume that the company is operating at full capacity, but that additional machines can be rented to produce the special order at a cost of $60,000. If the special order is accepted, identify the effect on the company