Required A

Required B

What impact would accepting this special order have on operating profit? $($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", keeping Status Quo as the base. Select "none" if there is no effect.$)$

$\backslash$table$[[,\backslash$table$[[$Costs and Revenues$],[($Thousands of Dollars$)]]],[,\backslash$table$[[$Status Quo $50,000],[$Units$]],\backslash$table$[[$Alternative $60,000],[$Units$]],$Difference$],[$Sales revenue,,$3$i$.,$P$],[$Variable costs:,,,$],[$Production$,,,(],[$Administrative$,,*,],[$Contribution margin,,,$],[$Fixed costs,,,$],[$Operating profit,,,$]]$

Required A

Required B

What impact would accepting this special order have on operating profit? $($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", keeping Status Quo as the base. Select "none" if there is no effect.$)$

$\backslash$table$[[,\backslash$table$[[$Costs and Revenues$],[($Thousands of Dollars$)]]],[,\backslash$table$[[$Status Quo $50,000],[$Units$]],\backslash$table$[[$Alternative $60,000],[$Units$]],$Difference$],[$Sales revenue,,$3$i$.,$P$],[$Variable costs:,,,$],[$Production$,,,(],[$Administrative$,,*,],[$Contribution margin,,,$],[$Fixed costs,,,$],[$Operating profit,,,$]]$

Rowe Tool and Die $($RTD$)$ produces metal fittings as a supplier to various manufacturing firms in the area. The following is the forecasted income statement for the next quarter, which is the typical planning horizon used at RTD$.$ RTD expects to sell $50,000$ units during the quarter. RTD carries no inventories.

$\backslash$table$[[,$Amount,Per U$,$Unit$],[$Sales revenue,$$1,375,000,$$$2,27\mathrm{.}50],[$Costs of fitting produced,$1,050,000,,21\mathrm{.}00],[$Gross profit,$$325,000,$$$,6\mathrm{.}50],[$Administrative costs,$242,500,,4\mathrm{.}85],[$Operating profit,$$82,500,$$$,1\mathrm{.}65]]$

Fixed costs included in this income statement are $$325,000$ for depreciation on plant and machinery and miscellaneous factory pperations and $$97,000$ for administrative costs. RTD has received a request for $10,000$ fittings to be produced in the next quarter from Endicott Manufacturing. Endicott has never purchased from RTD$,$ although they have been a local company for many years. Endicott has offered to pay $$20\mathrm{.}50$ per unit. RTD can easily produce the $10,000$ units with its existing capacity. Production of the $10,000$ units will incur all variable manufacturing costs but no fixed manufacturing costs. No administrative costs will be incurred because of the order.

Required:

a$.$ What impact would accepting this special order have on operating profit?

p$.$ Should RTD accept the order?

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