1. Comfy Company manufactures slippers and sells them at $20 a pair. Variable manufacturing cost is $6.50 a pair, and allocated fixed manufacturing cost is $3.0 a pair. It has enough idle capacity available to accept a one-time-only special order of 15,000 pairs of slippers at $16 a pair. Comfy will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normal sales? Show your calculations.

2.Arora Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2020 and the expected costs in 2021:

Current Costs in Expected Costs in 2020 2021 Variable manufacturing costs Direct material cost per CMCB $ 200 $ 180 Direct labour cost per CMCB 50 Variable manufacturing cost per batch 1,800 1,600 for setups, materials handling, and quality control Fixed manufacturing costs Fixed manufacturing overhead costs that 43 0,000 430,000 can be avoided if CMCBs are not made Fixed manufacturing overhead costs of 760,000 760,000 plant depreciation, insurance, and administration that cannot be avoided even if CMCBs are not made