Holtrop Corporation has received a request for a special order of 9,400 units of product Z74 for $46.90 each. The normal selling price of this product is $52.00 each, but the units would need to be modified slightly for the customer. The normal unit product cost of product Z74 is computed as follows:

Direct materials	$17.70
Direct labor	7.00
Variable manufacturing overhead	4.20
Fixed manufacturing overhead	7.10
Unit product cost	$36.00

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like some modifications made to product Z74 that would increase the variable costs by $6.60 per unit and that would require a one-time investment of $46,400 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order.

Required:

Determine the effect on the company's the incremental net operating income of accepting the special order. (Omit the "$" sign in your response.)

Incremental net operating income

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Nicklin Corporation is considering two alternatives, code-named M and N. Costs associated with the alternatives are listed below:

	Alternative M		Alternative N
Supplies costs	$	57,000	$	51,000
Power costs	$	32,000	$	32,000
Inspection costs	$	12,000	$	18,500
Assembly costs	$	25,000	$	14,000

Required:

a.	Which costs are relevant and which are not relevant in the choice between these two alternatives?

Supplies costs	(Click to select)RelevantNot relevant
Power costs	(Click to select)Not relevantRelevant
Inspection costs	(Click to select)Not relevantRelevant
Assembly costs	(Click to select)RelevantNot relevant

b.	What is the differential cost between Alternative M and Alternative N? (Enter your answer as a negative amount with a minus sign. Omit the "$" sign in your response.)

Differential cost

$

$