Please answer question 2.

8. value: 12.50 points Problem 10-21B Accept or Reject a Special Order [LO10-4) Rovio Suksia, a Finnish company, produces cross-country ski poles that it sells for 34 a pair. (The Finnish unit of currency, the euro, is denoted by .) Operating at capacity, the company can produce 50,000 pairs of ski poles a year. Costs associated with this level of production and sales are given below: Per Pair Total Direct materials 10 500,000 Direct labor 3 150,000 Variable manufacturing overhead 50,000 Fixed manufacturing overhead 200,000 Variable selling expense 2 100,000 Fixed selling expense 150,000 Total cost 23 1,150,000 1 4 3 Required: 1. The Finnish army would like to make a one-time-only purchase of 9,300 pairs of ski poles for its mountain troops. The army would pay a fixed fee of 5 per pair, and in addition it would reimburse Rovio Suksia for its unit manufacturing costs (both fixed and variable). Due to a recession, the company would otherwise produce and sell only 40,700 pairs of ski poles this year. (Total fixed manufacturing overhead cost would be the same whether 40,700 pairs or 50,000 pairs of ski poles were produced.) The company would not incur its usual variable selling expenses with this special order. If Rovio Suksia accepts the army's offer, by how much would net operating income increase or decrease from what it would be if only 40,100 pairs of ski poles were produced and sold during the year? Answer is complete and correct. in net operating 83,700 Increase income 2. Assume the same situation as described in requirement (1) above, except that the company is already operating at capacity and could sell 50,000 pairs of ski poles through regular channels. Thus, accepting the army's offer would require giving up sales of 9,300 pairs at the normal price of 34 a pair. If the army's offer is accepted, by how much will net operating income increase or decrease from what it would be if the 9,300 pairs were sold through regular channels? Answer is complete but not entirely correct. in net operating income 65,100 Increase