Sales volume in units 110 Revenue Variable costs $8,800 $1,100 Contribution margin $7,700 Fixed costs Profit $1,300 $6,400 Special order: A client wants to buy 10 units at a discounted price of $20 per unit. This is a one-time deal (ie, a short-term decision). You have enough spare capacity to fulfil this special order without cutting back on your regular sales. a) Use the gross approach to decide whether you should take the special order: status quo (no special order) Revenue $8,800 Variable costs $1,100 Contribution margin $7,700 Fixed costs $1,300 Profit $6,400 total amounts after adding the special order Should you take the special order? Why? YES-the profit is higher with the special order YES the profit is positive with the special order NO the low price for the special order reduces the contribution margin b) Use the incremental approach to decide whether you should take the special order. how much each amount changes after adding the special order Incremental revenue Incremental variable costs Incremental contribution margin Incremental fixed costs Incremental profit Should you take the special order? Why? YES the total profit is positive MicBook Air