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Sandhill Packaging Company is a leading manufacturer of cardboard boxes and other product packaging solutions. One of the company$$s major product lines is custom$-$printed cake boxes that are sold to some of the country$$s best known bakeries at a price of $$0\mathrm{.}50$ per box. To maintain its high$-$quality image, Sandhill uses a thick premium coated paper for all of its cake boxes. Based on annual production of $1,000,000$ boxes, Sandhill$$s cost for producing a box is as follows:

Paper $$0\mathrm{.}15$

Ink $0\mathrm{.}04$

Direct labor $0\mathrm{.}05$

Variable overhead $0\mathrm{.}08$

Fixed overhead $0\mathrm{.}10$

Total cost per box $$0\mathrm{.}42$

Andrea Borden, a recent graduate of the Culinary Institute of America, is opening a new bakery in her hometown. She recently contacted Brad Lail, Sandhill$$s top salesperson, about purchasing cake boxes for her new store. Brad described Sandhill$$s boxes, emphasizing the high$-$quality paper and the unique printing process the company uses. Andrea is looking for ways to lower her operating costs, so after hearing Brad describe Sandhill$$s boxes, she told him that all she needed was a simple, unprinted box. Andrea also told Brad that she needs $10,600$ boxes and is willing to pay $$0\mathrm{.}26$ per box.

$($a$)$ Based on Andrea$$s offer of $$0\mathrm{.}26$ per box for an unprinted box, should Sandhill accept Andrea$$s order? Sandhill currently has excess production capacity and can easily accommodate Andrea$$s order in the production schedule.

Sandhill Select an option should or should not accept the order.

$($b$)$ Since Andrea wants a simple box, Brad is exploring using a lighter$-$weight paper for her boxes. He has found a suitable paper that will cost $$0\mathrm{.}10$ per box. If Sandhill uses this lighter$-$weight paper for Andrea$$s boxes, should the company accept Andrea$$s order at a price of $$0\mathrm{.}26$ per box? Sandhill currently has excess production capacity and can easily accommodate Andrea$$s order in the production schedule.

Sandhill Select an option should or should not accept the order.

$($c$)$ After visiting with Andrea, Brad received a fax from one of London$$s top bakeries. The bakery$$s normal box supplier suffered some fire damage and is unable to ship the bakery$$s order of $10,600$ boxes this month. The bakery$$s owner is asking if Sandhill can fill a onetime rush order of $10,600$ boxes printed with the bakery$$s logo$.$ The bakery is willing to pay a $10\%$ price premium to expedite the order. If Sandhill accepts the order, it will incur $$780$ in export taxes and shipping.

Calculate the Profit on special order.

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