Lakeside Incorporated produces a product that currently sells for $72 per unit. Current production costs per unit include direct materials, $20; direct labor, $24; variable overhead, $10; and fixed overhead, $10.

1. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit.

Required:

A. What would be the incremental profit or loss if Lakeside could sell the refined version of its product for $80 per unit?

Note: Do not round your intermediate calculations. Round your final answer to 2 decimal places. Loss amounts should be indicated with a minus sign

B. Should it be processed further?

2. Lakeside has received an offer from a nonprofit organization to buy 6,000 units at $56 per unit. Lakeside currently has unused production capacity.

Required:

A. Calculate the effect on Lakeside's operating income of accepting the order from the nonprofit organization. (Increase or Decrease)

B. Should Lakeside accept this special sales order?