The manufacturing plant of Carilla Ltd$.$ specializes in crafting specialized pieces for carnival.

With a monthly production capacity of $15,000$ pieces, the company currently manufactures and

sells $11,000$ pieces per month. Typically priced at $$200$ per piece, the company's cost

breakdown for the ongoing production level is outlined below:

$$ Variable costs that vary with number of units produced

Direct materials $ $440,000$

Direct manufacturing labor $495,000$

Variable costs $($for setups, materials handling, quality control, etc.$)$

that vary with number of batches, $220$ batches $*$ $$500$ per batch $110,000$

$$ Fixed Costs

Fixed manufacturing costs $300,000$

Fixed marketing costs $200,000$

Total costs $$1,545,000$

Carilla has just received a special one$-$time$-$only order for $4,000$ pieces at $$150$ per piece.

Accepting the special order would not affect the company$$s regular business. Carilla makes

pieces for its existing customers in batch sizes of $50$ pieces $(220$ batches $50$ pieces per batch $=$

$11,000$ pieces$).$ The special order requires Carilla to make the pieces in $40$ batches of $100$ each.

Required

$1.$ Should Carilla accept this special order? Show your calculations. $(20$ Marks$)$

$2.$ Suppose plant capacity were only $13,000$ pieces instead of $15,000$ pieces each month. The

special order must either be taken in full or be rejected completely. Should Carilla accept the

special order? Show your calculations. $(20$ Marks$)$

$3.$ As in requirement $1,$ assume that monthly capacity is $15,000$ pieces. Carilla is concerned that

if it accepts the special order, its existing customers will immediately demand a price discount

of $$20$ in the month in which the special order is being filled. They would argue that Carilla$$s

capacity costs are now being spread over more units and that existing customers should get the

benefit of these lower costs. Should Carilla accept the special order under these conditions?

Show your calculations. $(10$ Marks$)$

$4.$ By reference to the above data:

a$)$ Explain whether historical costs and future costs are relevant? $(5$ Marks$)$

b$)$ Differentiate between quantitative and qualitative aspects in the process of decisionmaking? $(5$ Marks$)$