1) EXERCISE: Special Order Carney Company manufactures cappuccino makers. For the first eight months of 2013, the company reported the following operating results while operating at 80% of plant capacity: Sales (500,000 units) Cost of goods sold Gross profit Operating expenses Net income $90,000,000 54.000.000 36,000,000 24.000.000 $12.000.000 An analysis of costs and expenses reveals that variable cost of goods sold i $95 per unit and variable operating expenses are $35 per unit.In September, Carney Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses. Required: (a) Prepare an incremental analysis for the special order, (b) Should Carney Company accept the special order? Justify your answer. 2) EXERCISE: Make or Buy Larkin, Inc. uses 1,000 units of the component NJF1 every month to manufacture one of its products. The unit costs incurred to manufacture the component are as follows: Direct materials Direct labor Overhead Total $ 65 48 96 $209 Overhead costs include variable material handling costs of $10, which are applied to products on the basis of direct material costs. The remainder of the overhead costs are applied on the basis of direct labor dollars and consist 50% variable costs and 50% fixed costs. A vendor has offered to supply the NJF1 component at a price of $175 per unit. Required: (a) Should Larkin purchase the component from the outside vendor if its capacity remains idle? (b) Should Larkin purchase the component from the outside vendor if it can use its facilities to manufacture another product? What information will Larkin need to make an accurate decision? Show your calculations