Exercise $4-41($Algo$)$ Special Order $($LO $4-1,2)$

Fairmount Travel Gear produces backpacks and sells them to vendors who sell them under their own label. The cost of one of its

Riverside Discount.Mart, a chain of low$-$price stores, has asked Fairmount to supply it with $33,000$ backpacks for a special promotion

Riverside is planning. Riverside has offered to pay Fairmount a unit price of $$52$ per pack. The regular selling price is $$74.$ The special

order would require some modification to the basic model. These modifications would add $$5\mathrm{.}40$ per unit in material cost, $$2\mathrm{.}90$ per

unit in labor cost, and $$1\mathrm{.}90$ in variable overhead cost. Although Fairmount has the capacity to producerthe $33,000$ units without

affecting its regular production of $464,000$ units, a one$-$time rental of special testing equipment to meet Riverside's requirements

would be needed. The equipment rental would be $$98,800$ and would allow Fairmount to test up to $64,000$ units.

Required:

a$.$ Prepare a schedule to show the impact of filling the Riverside order on Fairmont's profits for the year.

b$.$ Do you agree with the decision to accept the special order?

c$.$ Considering only profit, determine the minimum quantity of backpacks in the special order that would make it profitable.

Complete this question by entering your answers in the tabs below.

Prepare a schedule to show the impact of filling the Riverside order on Fairmont's profits for the year, $($Enter your answers in

thousands rounded to $1$ decimal place, $($i$.$e$.,5,400,400$ should be entered as $5,400\mathrm{.}4).$ Select option "higher" or "lower",