The Medal Plus Company manufactures windows. Its manufacturing plant has the capacity to produce 11,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window. Cost information for the current activity level is as follows:

Variable costs that vary with the number of units produced

Direct materials $400,000

Direct manufacturing labor 350,000

Variable costs (for setups, materials handling, quality control, and so on) that vary with the number of batches, 50 batches x $800 per batch 40,000

Fixed manufacturing costs 75,000

Fixed marketing costs 150,000

Total costs $1,015,000

Medal plus has just received a special one-time-only order for 1,000 windows at $200 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Medal Plus makes windows for its existing customers in batch sizes of 200 windows (50 batches x200 windows per batch =10,000 windows). The special order requires Medal Plus to make the windows in 88 batches of 125 windows.

Requirement 2. Suppose plant capacity was only 10,500 windows instead of 11,000 windows each month. The special order must either be taken in full or be rejected completely. Should Medal Plus accept the special order? Show your calculations. Complete the analysis below to determine if Medal Plus should accept the special order under this scenario.

		With One-Time
		Only Special Order
		Under Reduced
		Plant Capacity
		10,500 Windows
Revenues
Variable costs:
	Direct materials
	Direct manufacturing labour
	Batch manufacturing costs
Fixed costs:
	Fixed manufacturing costs
	Fixed marketing costs
Total costs
Operating income