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The Dubs Division of Fast Company (the parent company) produces wheels for off-road sport vehicles. Dubs has two products, 1 and 2. The two products

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The Dubs Division of Fast Company (the parent company) produces wheels for off-road sport vehicles. Dubs has two products, 1 and 2. The two products only differ in how they are marketed. Product 1 is sold in bulk to customizing shops, while Product 2 is sold directly to consumers. Dub's estimated operating data for the year follows. Product 1 .... $300 each... $56 each Product 2 .... $400 each $56 each $110 each $50,000 $80,000 Sales Price Var Mfg Var G&A Fixed Mfg Fixed G&A .. $37 each ... $50,000 $60,000 Unless otherwise stated assume the fixed costs given above are allocated costs and unavoidable. Assume the Dubs division currently has excess production capacity and can only sell 1,000 units of Pi and 1,000 units of P2. How much would profits increase if it accepted a special order to sell 500 units to a discount automotive parts supplier for $250 each? The special order could be filled at the same variable manufacturing cost per unit as current production. Further, the special order would not reduce the volume of regular sales. Dubs would not incur its normal Variable General and Administrative costs on the special order but rather they estimate these costs to be $50 per wheel

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