The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are

10,000 windows per month. The company normally charges $250 per window.

Variable costs that vary with number of units produced
Direct materials	$600,000
Direct manufacturing labor	700,000
Variable costs (for setups, materials handling, quality control, and so on)
that vary with number of batches, 100 batches x $1,500 per batch	150,000
Fixed manufacturing costs	250,000
Fixed marketing costs	400,000
Total costs	$2,100,000

Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows (100 batches x 100 windows per batch = 10,000 windows). The special order requires Reward One to make the windows in 25 batches of 80 windows.

Requirement 1. Should Reward One accept this special order? Show your calculations.

Begin by completing an analysis, and start by showing the computation of the company's operating income without the special order. Next, calculate operating income with the special order, and then calculate the differences between the two columns. (Complete all answer boxes. For amounts with no change, make sure to enter "0" in the appropriate cells of the Difference column.)

	without one-time special order 10,000 windows	with-one time only special order 12,000 windows	difference 2,000 windows
Revenues
Variable costs:
Direct materials
direct manufacturing labor
Batch manufacturing costs
Fixed Costs:
Fixed manufacturing costs
Fixed marketing costs
Total Costs
Operating income

Based on the above calculations, Reward One should		accept or not accept	the one-time only special order if it has no long-term
implications because accepting the order	increases or decreases	operating income by $			.

Requirement 2. Suppose plant capacity were only 1,000 windows instead of 12,000 windows each month. The special order must either be taken in full or be rejected completely. Should Reward One accept the special order? Show your calculations. Complete the analysis below to determine if Reward One should accept the special order under this scenario.

	With one-time special order under reduced plant capacity 11,000 windows
Revenues
Variable costs:
direct Materials
Direct manufacturing labor
batch manufacturing costs
Fixed costs:
Fixed manufacturing costs:
fixed marketing costs
Total Costs
operating income

Based on the calculations under this scenario, Reward One should accept or not accept the one-time only special order under the

reduced capacity because accepting the order increases or decreases operating income by $

Requirement 3. As in requirement 1, assume that monthly capacity is 12,000 windows. Reward One 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 Reward One's

capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Reward One accept the special order under these conditions? Show your calculations.

.

Requirement 1. Should Reward One accept this special order? Show your calculations. Begin by completing an analysis, and start by showing the computation of the company's operating income without the special order. Next, calculate operating income with the special order, and then calculate the differences between the two columns. (Complete all answer boxes. For amounts with no change, make sure to enter "0" in the appropriate cells of the Difference column.) Without With One-Time Only Special Order 10,000 Windows One-Time Only Special Order 12,000 Windows Difference 2,000 Windows Revenues Variable costs: Direct materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income Requirement 2. Suppose plant capacity were only 11,000 windows instead of 12,01 Complete the analysis below to determine if Reward One should accept the special With One-Time Only Special Order Under Reduced Plant Capacity 11,000 Windows Revenues Variable costs: Direct materials Direct manufacturing labor Batch manufacturing costs Fixed costs: Fixed manufacturing costs Fixed marketing costs Total costs Operating income