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t costs for 3,000 units: 25. Lorraine manufactures a single product with the following full uni Direct materials Direct labor Manufacturing overhead (40% variable) Selling expenses (60% variable) Administrative expenses (10% variable) Total per unit $80 40 120 40 20 $300 A company recently approached Lorraine with a special order to purchase 500 units for $300. rently sells the models to dealers for $550. expenses would be incurred on the special order. Lorraine cur- Capacity is sufficient to produce the extra 1,000 units. No selling Required a. Ignoring the special order, determine Lorraines profit on production and sales of 3,000 units. Ignore tax- b. Should Lorraine accept the special order if its goal is to maximize short-run profits? Determine the impact c. Determine the minimum price Lorraine would want, to increase before tax profits by $80,000 on the spe- d. W es in these analyses. on profit of accepting the order cial order hen making a special order decision, what non-quantitative aspects of the decision should Lorraine consider? (15 points)



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