Ward Co manufactures portable scanners. The firm received a special-order inquiry for a scanner that will be sold in a market that Ward does not operate in. The customer has offered to purchase 11,000 scanners if the order can be completed by the end of the month. The cost data for the scanner is as follows:

Direct materials	$16.40
Direct labour 0.25 hours at $18 per hour	4.50
Variable overhead 0.5 machine hours at $15 per hour	7.50
Fixed overhead 0.5 machine hours at $25 per hour	12.50
	$40.90

Additional Data

the normal selling price for a scanner is $53; however, the customer has offered Ward only $31.50 because of the large quantity it is willing to purchase

Wards capacity is based on machine hours. The currently monthly capacity is 15,000 machine hours and Ward is currently operating at 75% capacity.

Required

a. Calculate the number of units of regular sales that will be lost if this special order is taken. (Hint: start by calculating the number of machine hours we need and then convert this to units.)

b. Calculate the contribution margin per unit of special order.

c. Calculate the incremental income to Ward if they accept the special order. Would you recommend they accept the special order?