1. ABC Ltd produced jewlery boxes for retail customers such as Walmart. One of their most popular products has the following selling price and costs:

Description	Dollar value per unit
Selling price	$45.00
Direct materials	$9.00
Direct labour	$8.10
Variable overhead	$7.20
Fixed overhead	$6.30
Sales commission	$2.25
Income per unit	$12.15

The company, due to the impact of a world-wide pandemic, is not at capacity. They also have some non-manufacturing fixed costs (such as sales and administration costs). They have provided the following details

Capacity (units)	20,000
Production (units)	16,000
Fixed non-manufacturing costs (annual)	$48,600

XYZ Ltd, who has not bought from ABC Ltd before has offered to buy jewelry boxes for a special event hat XYZ is managing. XYZ Ltd is from a geographic region outside the are normally serviced by ABC Ltd. XYZ Ltd has agree to pay the transportation costs. In addition, because no salesperson was involved, there will be no sales commission paid on this sale.

Other details of XYZS offer are as follows:

Total units required	3,000
Purchase price per unit	$28.00
Transportation costs / units	$1.20

Use the above information to answer the following questions:

1. If ABC Ltd. Accepts this order, will operating income increase, decrease or stay the same?

1. increase
2. decrease
3. stay the same

2. By how much will operating income change if the order is accepted?

___________

3. Assume, INSTEAD, that the order from XYZ Ltd, was obtained through a salesperson so sales commission has to be paid. In addition, XYZ Ltd has asked ABC Ltd. To pay all transportation costs. Given this new information, will ABCs operating income increase, decrease, or stay the same?

1. Increase
2. Decrease
3. stay the same

4. Given this new information, by how much will operating income change if the order was accepted now?

________________

5. What qualitative factors support accepting the order from XYZ Ltd.?

1. Improve employee moral
2. May have a negative impact on regular business
3. Increase the companys brand awareness in the current geographical region
4. Reduce the need to lay off employees
5. Reduction in idle capacity

**step-by-step solution would be preferred, just trying to learn how to approach questions like this