West Coast Digital $($WCD$)$ produces high$-$quality audio and video equipment. One of the company$$s most popular products is a high$-$definition personal video recorder $($PVR$)$ for use with digital television systems. Demand has increased rapidly for the PVR over the past three years, given the appeal to customers of being able to easily record programs while they watch live television, watch recorded programs while they record a different program, and save dozens of programs for future viewing on the unit$$s large internal hard drive.

A complex production process is utilized for the PVR involving both laser and imaging equipment. WCD has a monthly production capacity of $4,000$ hours on its laser machine and $1,000$ hours on its image machine. However, given the recent increase in demand for the PVR$,$ both machines are currently operating at $90\%$ of capacity every moth, based on existing orders from customers. Direct labor costs are $$15$ and $$20$ per hour to operate, respectively, the laser and image machines.

The revenue and costs on a per unit basis for the PVR are as follows:

Selling price $$320\mathrm{.}00$

Cost to manufacture:

Direct materials $$50\mathrm{.}00$

Direct labour $$ laser process $60\mathrm{.}00$

Direct labour $$ image process $20\mathrm{.}00$

Variable overhead $40\mathrm{.}00$

Fixed overhead $50\mathrm{.}00$

Variable selling costs $20\mathrm{.}00$

Cost to manufacture $240\mathrm{.}00$

Operating profit $$80\mathrm{.}00$

Required:

$1.$ Assuming productive capacity cannot be increased for either machine in December, how many PVRs would WCD have to forgo selling to existing customers to fill the special order from Scottie Barnes Limited $?$

$2.$ Calculate the opportunity cost of accepting the special order.

$3.$ Calculate the net effect on profits of accepting the special order.

$4.$ Now assume that WCD is operating at $75\%$ of capacity in December. What is the minimum price WCD should be willing to accept on the special order?