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Blinding Lights Inc. produces luxury light bulbs and sells them for $42 each. At capacity, the company can produce 100,000 bulbs a year. The costs of producing and selling 100,000 bulbs are as follows: Cost per Bulb ($) Total Costs ($) Direct Materials 7 700,000 Direct Manufacturing Labor 15 1,500,000 Variable Manufacturing 4 400,000 Overhead Fixed Manufacturing 10 1,000,000 Overhead Variable Selling Expenses 0.5 50,000 Fixed Selling Expenses 1 100,000 Total Costs 37.5 3,750,000 Required: 1. Suppose Blinding Lights Inc. is currently producing and selling 75,000 bulbs. At this level of production and sales, its fixed costs are the same as given in the preceding table. Gram & My Inc. wants to place a one-time special order for 25,000 bulbs at $27 each. Also, Blinding Lights Inc. will not incur variable selling costs for this special order. Should Blinding Lights Inc. accept this one time special order? Show your calculations. 2 marks 2. Now suppose Blinding Lights Inc. is currently producing and selling 100,000 bulbs. If Blinding Lights Inc. accepts Gram & My's offer, it will have to sell 25,000 fewer bats to its regular customers. (a) On financial considerations alone, should Blinding Lights Inc, accept this one-time special order? Show your calculations. 4,5 marks (b) On financial considerations alone, at what price would Blinding Lights Inc. be indifferent between accepting the special order and continuing to sell to its regular customers at $42 per bulb? 2 marks (c) What other factors should Blinding Lights Inc. consider in deciding whether to accept the one-time special order? 2 marks

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