The management team of Vaughn Industries was evaluating its performance for the first half of the year. Production and sales of its fans were on budget at 2,800 units to date, with the following income statement reflecting its income for the first half of the year. Sales Variable costs: $246,400 DM $42,000 DL 30,800 Variable-MOH 8,400 Variable selling 8,400 89.600 Contribution margin 156,800 Fixed costs: Fixed-MOH Fixed selling Operating income (loss) 33,000 103,000 136,000 $20,800 Orders for the second half of the year were coming in slower than what the company had been expecting. When a new customer called and requested a special discount, the sales team listened.