. The Cozy

Cozy Company manufactures slippers and sells them at $ 10

$10 a pair. Variable manufacturing cost is $ 5.75

$5.75 apair, and allocated fixed manufacturing cost is $ 1.75

$1.75 a pair. It has enough idle capacity available to accept aone-time-only special order of 25 comma 000

25,000 pairs of slippers at $ 7.50

$7.50 a pair. Cozy

Cozy will not incur any marketing costs as a result of the special order. What would the effect on operating income be if the special order could be accepted without affecting normalsales: (a)$0, (b) $ 43 comma 750

$43,750 increase, (c) $ 143 comma 750

$143,750 increase, or(d) $ 187 comma 500

$187,500 increase? Show your calculations.

2. The Manchester

Manchester Company manufactures Part No. 498 for use in its production line. The manufacturing cost per unit for 10 comma 000

10,000 units of Part No. 498 is asfollows:

Direct materials

$

3

Variable direct manufacturing labor

40

Variable manufacturing overhead

10

Fixed manufacturing overhead allocated

21

Total manufacturing cost per unit

$

74

The Remnant

Remnant Company has offered to sell 10 comma 000

10,000 units of Part No. 498 to Manchester

Manchester for $ 71

$71 per unit. Manchester

Manchester will make the decision to buy the part from Remnant

Remnant if there is an overall savings of at least $ 45 comma 000

$45,000 for Manchester

Manchester. If Manchester

Manchester accepts Remnant

Remnant's offer, $ 11

$11 per unit of the fixed overhead allocated would be eliminated.Furthermore, Manchester

Manchester has determined that the released facilities could be used to save relevant costs in the manufacture of Part No. 575.