Jones Company makes a product that regularly sells for $$13\mathrm{.}00$ per unit.

$(1)($Click the icon to view additional information.$)$

$7.$ If JonesCompany has excess capacity, should it accept the offer from Nelsonshow your calculations.

$8.$ Does your answer change if JonesCompany is operating at capacity? Why or why not?

$7.$ If Jones Company has excess capacity, should it accept the offer from Nelson? Show your calculations. $($Use a minus sign or parentheses to show a decrease in operating income.$)$

Expected increase in revenue

Expected increase in variable manufacturing costs

Expected increase$/($decrease$)$ in operating income

Jones should the offer because operating income will

$8.$ Does your answer change if Jones Company is operating at capacity? Why or why not? $($Enter an expected decrease in revenue with a minus sign or parentheses.$)$

Revenue at capacity sale price

Less: Revenue at regular sale price

Expected increase$/($decrease$)$ in revenue

Jones should the offer if operating at capacity because operating income will

More info

The product has variable manufacturing costs of $$7\mathrm{.}00$ per unit and fixed manufacturing costs of $$2\mathrm{.}50$ per unit $($based on $$350,000$ total fixed costs at current production of $140,000$ units$).$ Therefore, total production cost is $$9\mathrm{.}50$ per unit. Jones Company receives an offer from Nelson Company to purchase $4,800$ units for $$12\mathrm{.}00$ each. Selling and administrative costs and future sales will not be affected by the sale, and Jones does not expect any additional fixed costs.