A manufacturer builds and markets laptop computers for home and small business use. The company has been approached by an outside supplier offering to provide completed screens to the company for $$63$ each. The company's marketing director negotiated the deal personally and is thrilled about how much cheaper it will be to purchase the screens from outside. Producing the cost data outlined below, the manager believes there is a $$30$ per unit savings.

Per Unit Costs:

Direct materials $$38$

Direct labor $$8$

Variable manufacturing overhead $$7$

Fixed manufacturing overhead $$40$

Total cost $$93$

It has been determined that sales in future years will be $10,000$ units per year. If the company decides to buy the screens from the outside supplier, $20\%$ of the fixed manufacturing overhead will be eliminated.

What will be the impact on annual company net income if the part is purchased?

$$20,000$ increase

$$20,000$ decrease

$$30,000$ increase

$$30,000$ decrease

A company has been offered a special order to sell $100$ units of a product at a price of $$400$ per unit. The normal selling price per unit is $$520.$ The company has spare operating capacity and can produce the special order using direct materials that cost $$60$ per unit, direct labor costs of $$190$ per Unit and manufacturing overhead costs of $$200$ per unit. Of the manufacturing overhead cost, $$75$ is fixed.

What would be the effect on net income from accepting the special order?

$$5,000$ decrease in net income

$$2,500$ increase in net income

$$15,000$ increase in net income

$$12,000$ decrease in net income