Sam the Jeweler has been approached with a special order. A wealthy groom to be wants to give his 10 groomsmen special cufflinks each engraved with a special design with an inset diamond. The cufflinks would normally sell for $400. However, the groom wants a blue diamond rather a regular diamond so as to be unique. The variable (materials, labor, overhead) cost to add the blue diamond to each set of cufflinks will be $210. No additional fixed costs would be incurred to add the blue diamond. The groom has offered to pay $580 for each set of cufflinks. The cost of the normal cufflink is $100 for materials, $150 labor, $25 variable overhead, $45 fixed overhead, with a profit of $80. Engraving is free for all orders. 1. If there is sufficient excess capacity to accept the order, should the offer be accepted and why? 2. Compute the Variable Cost per unit Total Variable Cost per unit 3. Compute the increase or decrease in operating income when there is excess capacity Computation Increase in revenue Increase in variable costs Increase (decrease) in operating income 4. If there is NO sufficient excess capacity to accept the order, Should the order be accepted and why? (support your answer) 5. When there is no excess capacity, compute the change in contribution margin 10 units of 10 Units of Difference Special Order regular Increase in revenue Increase in variable costs Contribution Margin