Answer:
SafeRide, Inc.
a. The financial implications of accepting the order are that total production cost will increase by $315,000 with a corresponding increase in sales revenue of $540,000, and an increase in net income by $225,000.
b. Under full capacity, the total production cost will increase by $1,485,000 for adding additional facilities while the sales revenue would increase by $540,000, resulting to a loss of $945,000.
c. Under full-capacity circumstances, there is a financing disadvantage of accepting the order because the order will entail additional capacity and facilities, resulting to a loss of $945,000.
Explanation:
Annual production capacity = 300,000 units
Current production capacity = 180,000 units
Special order from a German manufacturer = 60,000 units
Special order price per unit = $9.00
Budgeted Costs For      180,000 Units  240,000 Units  Difference 60,000
Manufacturing costs 
Direct materials                 $450,000           $600,000       $150,000
Direct labor                           315,000             420,000          105,000
Factory overhead              1,215,000           1,260,000           45,000
Total                                  1,980,000          2,280,000       $300,000
Selling and administrative 765,000              780,000            15,000
Total                              $2,745,000        $3,060,000        $315,000
Costs per unit 
Manufacturing                       $11.00                  $9.50
Selling and administrative       4.25                     3.25
Total                                     $15.25                  $12.75
Selling price to North American manufacturers = $20 per unit
Financial implications of accepting the order:
Manufacturing costs 
Direct materials                  $150,000
Direct labor                           105,000
Factory overhead                  45,000
Total                                  $300,000
Selling and administrative    15,000
Total                                  $315,000
Total cost per unit = $5.25 ($315,000/60,000)
Total manufacturing cost per unit = $5 ($300,000/60,000)
Increase in net income from accepting the order = $225,000 ($9.00 - $5.25) * 60,000
Manufacturing costs 
Direct materials                  $150,000 (variable)
Direct labor                           105,000 (variable)
Factory overhead              1,215,000
Total                                $1,470,000
Selling and administrative    15,000 (assumed to be variable)
Total                               $1,485,000
Unit cost per additional unit = $24.75