Schaub Company produces and sells 60,000 boxes of specialty foods each year. Each box contains the same assortment of food. The company has computed the following annual costs:

Cost Item	Total Costs
Variable production costs	$420,000
Fixed production costs	460,000
Variable selling costs	240,000
Fixed selling and administrative costs	150,000
Total costs	$1,270,000

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Part 1

Schaub normally charges $26 per box. A new distributor has offered to purchase 6,000 boxes at a special price of $22 per box. Schaub will incur additional packaging costs of $2 per box to complete this order.

Requirements

(a)	Suppose Schaub has surplus capacity to produce 6,000 more boxes. What will be the effect on Schaub's income if it accepts this order?
(b)	Suppose that instead of having surplus capacity to produce 6,000 more boxes, Schaub has surplus capacity to produce only 2,500 more boxes. What will be the effect on Schaub's income if it accepts the new order for 6,000 boxes?

Requirement

(a) Suppose Schaub surplus capacity to produce 6,000 more boxes. What will be the effect on Schaub's income if it accepts this order?

Select the items that are relevant if the order is accepted, then calculate the effect on income. (Only complete the necessary answer boxes. Use parentheses or a minus sign for a net decrease in income.)

	in income

Part 2

Requirement

(b) Suppose that instead of having surplus capacity to produce 6,000 more boxes, Schaub has surplus capacity to produce only 2,500 more boxes. What will be the effect on Schaub's income if it accepts the new order for 6,000 boxes?

Select the items that are relevant if the order is accepted, then calculate the effect on income. (Only complete the necessary answer boxes. Use parentheses or a minus sign for a net decrease in income.)

	in income