Sherene Nili manages a company that produces wedding gowns. She produces both a custom product that is made to order and a standard product that is sold in bridal salons. Her accountant prepared the following forecasted income statement for March, which is a busy month:

	Custom Dresses			Standard Dresses			Total
Number of dresses		10			20			30
Sales revenue	$	47,500		$	27,500		$	75,000
Materials	$	9,500		$	7,500		$	17,000
Labor		19,500			8,500			28,000
Machine depreciation		550			250			800
Rent		3,700			2,300			6,000
Heat and light		1,000			600			1,600
Other production costs								2,300
Marketing and administration								7,200
Total costs							$	62,900
Operating profit							$	12,100

Ms. Nili already has orders for the 10 custom dresses reflected in the March forecasted income statement. The depreciation charges are for machines used in the respective product lines. Machines depreciate at the rate of $1 per hour based on hours used, so these are variable costs. In March, cutting and sewing machines are expected to operate for 800 hours, of which 550 hours will be used to make custom dresses. The rent is for the building space, which has been leased for several years at $6,000 per month. The rent, heat, and light are allocated to the product lines based on the amount of floor space occupied.

A valued customer, who is a wedding consultant, has asked Ms. Nili for a special favor. This customer has a client who wants to get married in early April. Ms. Nili's company is working at capacity and would have to give up some other business to make this dress. She can't renege on custom orders already agreed to, but she can reduce the number of standard dresses produced in March to 10. Ms. Nili would lose permanently the opportunity to make up the lost production of standard dresses because she has no unused capacity for the foreseeable future. The customer is willing to pay $22,900 for the special order. Materials and labor for the order will cost $5,500 and $9,500, respectively. The special order would require 115 hours of machine time. Ms. Nili's company would save 125 hours of machine time from the standard dress business given up. Rent, heat and light, and other production costs would not be affected by the special order.

a.Calculate the differential operating profit (loss).