Requirement 4: KMB Technology special order Assume your division chose to introduce routers in FYX2 (as described in Requirement 3). You have been approached by a new customer, KMB Technology, to fulfill a one-time special order for a modified version of your divisions router that would require special materials and a modified production process. KMB wants to purchase 10,000 units of this special router at $150 per unit. Your division has enough excess capacity to produce the modified router for KMB without interfering with existing business. The materials required for this special order will cost 20% more than materials for the standard router and a new machine that costs $210,000 will be required. Otherwise, all manufacturing costs would be the same as the costs to produce routers for regular customers (as described in Requirement 3). Assume the new machine required for this special order has no alternate uses and no salvage value. No sales commissions would be paid on this special order. Your first reaction to this special order is negative because KMB wants to pay significantly less than the $300 selling price regular customers pay for standard routers. Additionally, this special router would be costlier to produce because it requires more expensive materials and an expensive new machine. If this modified router is costlier to produce and KMB pays a lower price, then this deal might not be profitable for your division.

a. What will be the change in your divisions operating income if you accept KMB Technologys special order? (1 point)

b. What is the lowest selling price per unit you should accept for this modified router for KMB Technology? (1 point)