Sherene Nill 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 Standard Dresses Dresses Total Rent Number of dresses Sales revenue Materials Labor Machine depreciation Heat and light Other production costs 10 20 30 $52,000 $32,000 $84,000 $10,400 $8,400 $18,800 20,400 9,400 29,800 640 340 980 4,600 1,100 3,200 7,800 700 1,000 3,200 Marketing and administration 8,100 Total costs Operating profit $70,480 $13,520 Ms. Nill 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 980 hours, of which 640 hours will be used to make custom dresses. The rent is for the building space, which has been leased for several years at $7,800 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. Nill 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 $26,000 for the special order. Materials and labor for the order will cost $6,400 and $10,400, respectively. The special order would require 156 hours of machine time. Ms. Nill's company would save 170 hours of machine time from the standard dress business given up. Rent, heat and light, and other production costs would not be 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. Required: a-1. Calculate the differential operating profit (loss). a-2. From an operating profit (loss) perspective for March, should Ms. Nill accept the order? b. What is the minimum price Ms. Nili should accept to take the special order? Complete this question by entering your answers in the tabs below. Req A1 Req Az Req B Calculate the differential operating profit (loss). (Select option "Increase" or "decrease", keeping Without special order as the base. Select "none" if there is no effect.) Revenue Materials Labor Machine depreciation Contribution margin Rent Heat and light Other production costs Without Special Order With Special Order Impact Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B Calculate the differential operating profit (loss). (Select option "increase" or "decrease", keeping Without special order as the base. Select "none" if there is no effect.) Revenue Materials Labor Machine depreciation Contribution margin Rent Heat and light Other production costs Marketing and administration Operating profit (loss) Without Special With Special Order Order Impact Required: a-1. Calculate the differential operating profit (loss). a-2. From an operating profit (loss) perspective for March, should Ms. Nill accept the order? b. What is the minimum price Ms. Nili should accept to take the special order? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B From an operating profit (loss) perspective for March, should Ms. Nili accept the order? OYes ONO 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 $26,000 for the special order. Materials and labor for the order will cost $6,400 and $10,400, respectively. The special order would require 156 hours of machine time. Ms. Nill's company would save 170 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. Required: a-1. Calculate the differential operating profit (loss). a-2. From an operating profit (loss) perspective for March, should Ms. Nill accept the order? b. What is the minimum price Ms. Nili should accept to take the special order? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B What is the minimum price Ms. Nili should accept to take the special order? Minimum price < Req A2 Req B >