101) The Deerfield Company has annual productive capacity of 60,000 units per year. Budgeted operating results for 2006 are as follows:
Revenues (50,000 units @ $10)$500,000
Manufacturing (50,000 @ $3.20)$160,000
Selling (50,000 @ $0.80) 40,000 200,000
Selling and administrative 80,000 180,000
A wholesaler from another country wants to buy 5,000 units at a price of $8 per unit. All fixed costs would remain within the relevant range. Variable manufacturing costs would be the same per unit but variable selling costs would increase by $2 per unit on the special order only.
a. Determine whether the company should produce the special order.
b. Assuming Deerfield’s objective is to maximize profit, if the customer wants a special order of 20,000 un