Gina’s Inc.manufacturer’s 10,000 units of Part X5 each year for use on its production line. At this level of activity, the costs per unit for X5 is as follows: direct material $2.20, direct labor $1.60, variable manufacturing overhead $1.00, and fixed manufacturing overhead $4.00. An outside supplier has offered to sell 10,000 units of Part X5 to Gina’s Inc. for $10 per part. Fixed manufacturing overhead cannot be avoided. How much will profits increase or decrease if the outside supplier’s offer is accepted?

**Not A or B***

Southwest Company produces a single product. The cost of producing and selling a single unit of this product is as follows: selling price $24, direct material $4.50, direct labor $1.50, variable manufacturing overhead $1.00, fixed manufacturing overhead $3.20, variable selling and administrative expense $.50, and fixed selling and administrative expense $1.00. An order has been received for 2,000 units at a special price of $14 per unit. This order would not affect regular sales and fixed expenses will not change. Assuming the Southwest Company has excess capacity and the order is accepted, the company’s overall net operating income will increase (decrease) by:

**Not E or D**