A) Lattimer Company had the following results of operations for the past year:

Sales (15,000 units at $12.35)				$	185,250
Variable manufacturing costs	$	102,750
Fixed manufacturing costs		26,250
Selling and administrative expenses (all fixed)		41,250			(170,250	)
Operating income				$	15,000

A foreign company whose sales will not affect Lattimer's market offers to buy 5,700 units at $8.20 per unit. In addition to existing costs, selling these units would add a $0.32 selling cost for export fees. Lattimers annual production capacity is 25,000 units. If Lattimer accepts this additional business, the special order will yield a:

• $5,871 profit.

• $7,695 profit.

• $2,280 loss.

• $9,804 loss.

• $4,104 loss.

B)

Markson Company had the following results of operations for the past year:

Sales (8,000 units at $19.00)				$	152,000
Variable manufacturing costs	$	82,000
Fixed manufacturing costs		14,000
Variable selling and administrative expenses		8,000
Fixed selling and administrative expenses		19,000			(123,000	)
Operating income				$	29,000

A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $12.50 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,500 for the purchase of special tools. Marksons annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will:

• Increase by $2,500.

• Increase by $1,000.

• Decrease by $5,750.

• Decrease by $4,000.

• Decrease by $1,500.