Q2 - May I please get help/guidance with the following homerowrk question? Thank you for your help.

D. Lawrance designs and manufactures designer men's clothing.For the coming year, the company has scheduled production of 40,000 suede jackets.Budgeted costs for this product are as follows:

Unit costs (for 40,000 units)Total

Variable Manufacturing Costs$50$2,000,000

Variable Selling Expenses20800,000

Fixed Manufacturing Costs10400,000

Fixed Operating Expenses5200,000

Total $85$3,400,000

The management of D. Lawrance is considering a special order from Discount Apparel for an additional 10,000 jackets.These jackets would carry the Discount Apparel label, rather than the D. Lawrance label.In all other respects, they would be identical to the regular D. Lawrance jackets.

Although D. Lawrance regularly sells its jackets to retail stores at a price of $150, Discount Apparel has offered to pay only $80 per jacket.However, because no sales commissions would be involved with this special order, D. Lawrance will incur variable selling expenses of only $5 per unit on these sales, rather than the $20 it normally incurs.Accepting the order would cause no change in the company's fixed manufacturing costs or fixed operating expenses.D. Lawrance has enough plant capacity to produce 55,000 jackets per year.

What are the

a) incremental costs and

b) incremental revenues?

What is the expected effect of accepting this special offer on D. Lawrance's operating income. Show all calculations/cimputations.