Balakrishnan Company produces and sells 75,000 boxes of specialty foods each year. Each box contains the same assortment of food. The company has computed the following annual costs:

Cost Item	Total Costs
Variable production costs	$225,000
Fixed production costs	510,000
Variable selling costs	300,000
Fixed selling and admin costs	140,000
Total costs	$1,175,000

Balakrishnan normally charges $27 per box. A new distributor has offered to purchase $7,500 boxes at a special price of $23 per box. Balakrishnan will incur additional packing costs of $1 per box to complete this order.

Requirements:

(A) Suppose Balakrishnan has surplus capacity to produce 7,500 more boxes. What will be the effect on Balakrishnan's income if it accepts this order? Select the items that are relevant if the order is accepted, then calculate the effect on income.

(B) Suppose that instead of having surplus capacity to produce 7,500 more boxes, Balakrishnan has surplus capacity to produce only 2,500 more boxes. What will be the effect on Balakrishnan's income if it accepts the new order for 7,500 boxes?