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$11.$ Given:$$ A company expects to manufacture $40,000$ small medical devices next year and sell them to customers for $$115\mathrm{.}00$ per unit. The costs to produce these devices are estimated to include $$240,000$ in total variable costs and $$320,000$ in total fixed costs. An outside firm has offered to produce all $40,000$ devices for a total of $$400,000.$ Thirty percent of the fixed costs would be eliminated if the outsourcing option is taken. The volume of devices produced and sold and the revenue per unit is expected to be the same regardless of the outsourcing decision.

Required: Assuming the company outsources the production of the components, what is the financial impact $($i$.$e$.,$ change in operating income$)$ in dollars of accepting the outsourcing offer? In addition, in your answer make sure to indicate whether the financial impact would be an increase or decrease in the company$$s operating income.

$12.$ The C Company is evaluating a special order because the company is currently operating well under capacity. $$Using$$the company$$s normal costing process, variable costs of the special order would be $$336,000$ and fixed costs would be $$48,000.$ Of the fixed costs, $$6,000$ would be for unavoidable overhead costs, and the remainder for rent on a special machine needed to complete the order.

Required: What is the minimum price the controller should accept for the special order?

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