Sunrise Inc. manufactures two types of electronic devices (Product A and Product B). The manufacturing process is presently constrained by the machine-hours available on the special purpose machines used in the manufacturing process (working at full capacity).

The selling prices and the manufacturing costs of the two products are as follows:

Selling price/unit	Product A $ 200	Product B $ 300
Variable costs/unit
-Direct costs	$ 43	$ 55
-Overhead (@$40/MH)	$ 28	$ 46

Sunrise has been approached by Electronics Industries to make 250 units of a special device and is willing to pay $235 per unit. These special order will incur the following manufacturing costs and time:

Variable costs/unit $32

Machine-hours 200

Required

1. Calculate the contribution margin per machine-hour for each of the three types of devices (including the special order).

1. Identify production of what product the company may have to reduce to fulfill the special order and explain why.

1. Calculate the impact on short term operating income if the order is accepted. Remember, that to accept the special order, the company would need to release machine time for it by reducing the production of A or B product.