1. **Problem 16: Special order decision** A special order of 5,000 units is offered at 30 per unit. Variable cost is 18 per unit. Fixed costs remain unchanged and there is no effect on regular sales. Should the order be accepted? 2. **Formula and explanation:** Profit from special order = (Special order price - Variable cost) \times Quantity Since fixed costs do not change and regular sales are unaffected, only variable costs and revenue from the special order matter. 3. **Calculation:** Profit = $(30 - 18) \times 5000 = 12 \times 5000 = 60000$ 4. **Interpretation:** The special order yields a profit of 60000, so it should be accepted. --- 5. **Problem 17: Make-or-buy decision** Making costs: 220 variable + 90 avoidable fixed = 310 total per unit Buying costs: 330 per unit Which option is cheaper per unit? 6. **Calculation:** Difference = Buying cost - Making cost = $330 - 310 = 20$ 7. **Interpretation:** Making is cheaper by 20 per unit. **Final answers:** - Question 16: Yes, profit 60000 - Question 17: Make by 20