SooYun Ltd. produces jewelry boxes and one of their products has the following selling price and costs:

DescriptionDollar value

per unitSelling price$55.00Direct materials$11.00Direct labour$9.90Variable overhead$8.80Fixed overhead$7.70Sales commission$2.75Income per unit$14.85

The company also have some non-manufacturing fixed costs (such as sales and administration costs).They have provided the following details:

Capacity (units)35,000Current production (units)28,000Fixed non-manufacturing costs (annual)$103,950

Tmax Ltd. is a new one-time customer who has offered to buy the following jewelry boxes:

Total units required5,250Purchase price per unit$35.00Transportation costs / unit$1.25

Tmax Ltd. has agreed to pay the transportation costs.In addition, because no sales person was involved, there will be no sales commission paid on the sale to Tmax Ltd.

Required:

Use the above information to answer the following questions about this special order.

Part A:

If SooYun Ltd. accepts this order, will operating income increase, decrease or stay the same?

Enter IN for increase, DE for decrease, and NA for stay the same in the space provided.

By how much will operating income change if the order is accepted?

Enter your answer as a positive number.

Part B:

Assume, INSTEAD, that the order from Tmax Ltd. was obtained through a sales person so sales commission has to be paid. In addition, Tmax Ltd. has asked SooYun Ltd. to pay all transportation costs.

Given this new information, will SooYun's operating income increase, decrease or stay the same?

Enter IN for increase, DE for decrease, and NA for stay the same in the space provided.

Given this new information, by how much will operating income change if the order was accepted now?

Enter your answer as a positive number.