WEEK THREE: CHAPTER FOUR HOMEWORK i Saved 3 Exercise 4-37 (Algo) Special Orders (LO 4-1, 2) 25 points Alpine Luggage has a capacity to produce 390,000 suitcases per year. The company is currently producing and selling 310,000 units per year at a selling price of $402 per case. The cost of producing and selling one case follows: eBook Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs $ 164 39 75 21 $ 299 Print The company has received a special order for 20,000 suitcases at a price of $251 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $48 per suitcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: References Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case $ 251 164 39 48 21 $ (21) Required: a. What is the impact on profit for the year if Alpine accepts the special order? (Enter your answers in thousands of dollars. Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) (All revenues and costs in 9000) Status Quo Alternative 310,000 Units 330,000 Units Difference Sales revenue Variable costs: Manufacturing Selling and administrative Contribution margin Fixed costs Operating profit b. Do you agree with the decision to reject the special order? Yes No