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Question: London Company (the company) produces a clamp with the following unit cost (excludes selling cost): Direct Materials $ 2.50 Direct Labour $ 4.75 Variable Overhead $ 2.25 Fixed Overhead $ 1.00 Unit Cost $10.50 The production capacity is 40,000 units per year. Because of a mild recession, the company expects to produce only 28,000 clamps for the coming year The company also has fixed selling costs totaling $50,000 per year and variable selling costs of $2.50 per unit sold (which relates to the sales commission on each unit sold). The clamp normally sells for $15.00 each. At the beginning of the year, a customer from a geographic region outside the area normally served by the company offered to buy 11,000 clamps for $9.00 each. The customer also offered to pay all transportation costs as they are outside of the normally served by the company offered to buy 11,000 clamps for $9.00 each. The customer also offered to pay all transportation costs as they are outside of the normal region that the company sells to Since there would be no sales commissions involved, this order would not have any variable selling costs. Required: Use the above information to answer the following questions about this special order. Part A: If the company accepts this order, will their 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 IN By how much will operating income change if the order is accepted? Enter If the company accepts this order, will their 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. IN By how much will operating income change if the order is accepted? Enter your answer as a positive number. 7830000 Part B: Assume now that the order from the customer was through your most successful salesperson who is expecting to be paid their commission. Also assume that the customer requires you, London Company, to pay for any related transportation costs, which amount to $2.75 per unit. Given this new information, will operating income increase, decrease or stay the same if London Company accepts the order? Part B: Assume now that the order from the customer was through your most successful salesperson who is expecting to be paid their commission. Also assume that the customer requires you, London Company, to pay for any related transportation costs, which amount to $2.75 per unit. Given this new information, will operating income increase, decrease or stay the same if London Company accepts the order? Enter IN for increase, DE for decrease, and NA for stay the same in the space provided. IN A/ Considering these new details, by how much will operating change if London Company accepts the order? Enter your answer as a positive number in the space provided. 90 A