You sell high-quality fake IDs to college students at a regular price of $100. Your financial results for 2009 are summarized in the following contribution margin statement:

Special order: You have been approached by a client who wants to buy 20 units at a discounted price of $25 per unit. You have enough spare capacity to fulfill this special order without cutting back on your regular business (120 units at $100).

Required: a) Use the gross approach to decide whether you should fulfill this special order: 1. Compute total profit with the special order (total for the regular business plus the special order). To do that, compute total revenue, costs, etc with special order: Total revenue=$ Total VC=$ Total CM=$ Total FC=$ Profit = $ 2. Make a decision based on total profits with and without the special order. Should you take this special order? (enter 1 if yes, 2 if no)

b) Use the incremental approach to decide whether you should fulfill this special order: 1. Compute the incremental profit, i.e., thechangein profits relative to the status quo (status quo = no special order). To do that, computeincrementalrevenue (change in revenue), incremental variable costs, etc: Incremental revenue=$ Incremental VC=$ Incremental CM=$ Incremental FC=$ Incremental profit = $ 2. Make a decision based on incremental profits. Should you take this special order? (enter 1 if yes, 2 if no)

c) If you reached different conclusions in (a) and (b), explain why they are different. If you reached the same conclusions in (a) and (b), also explain why, and whether it is a coincidence or a general pattern.