Rogers Company makes a product that regularly sells for $$10\mathrm{.}50$ per unit.

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$7.$ If Rogers Company has excess capacity, should it accept the offer from Holden? Show your calculations.

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

$7.$ If Rogers 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

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

More info

The product has variable manufacturing costs of $$8\mathrm{.}00$ per unit and fixed manufacturing costs of $$1\mathrm{.}60$ per unit $($based on $$128,000$ total fixed costs at current production of $80,000$ units$).$ Therefore, total production cost is $$9\mathrm{.}60$ per unit. Rogers Company receives an offer from Holden Company to purchase $5,600$ units for $$12\mathrm{.}00$ each. Selling and administrative costs and future sales will not be affected by the sale, and Rogers does not expect any additional fixed costs.