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

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$7.$ If RobertsCompany has excess capacity, should it accept the offer from Holden$8$how your calculations.

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

$7.$ If Roberts Company has excess capacity, should it accept the offer from Holden? 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 $q,$

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

Roberts should the offer because operating income will

$8.$ Does your answer change if Roberts 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 $q,$

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

Roberts should $$ the offer if operating at capacity because operating income will

More info

The product has variable manufacturing costs of $$9\mathrm{.}00$ per unit and fixed manufacturing costs of $$2\mathrm{.}10$ per unit $($based on $$336,000$ total fixed costs at current production of $160,000$ units$).$ Therefore, total production cost is $$11\mathrm{.}10$ per unit. Roberts Company receives an offer from Holden Company to purchase $5,400$ units for $$8\mathrm{.}50$ each. Selling and administrative costs and future sales will not be affected by the sale, and Roberts does not expect any additional fixed costs.