42 42. (8 points) Hawk Inc. produces and sells 10,000 units per year but has capacity to produce and sell 12,500 units per year. Below is Hawk's per unit cost information: a. Avalon Corp. has offered to purchase 1,000 units from Hawk at a price of ( $ 550 ) per unit. Because Avalon has reached out to Hawk, no variable selling costs will be incur solutionspile.com

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42

42. (8 points) Hawk Inc. produces and sells 10,000 units per year but has capacity to produce and sell 12,500 units per year. Below is Hawk's per unit cost information: a. Avalon Corp. has offered to purchase 1,000 units from Hawk at a price of $ \$ 550 $ per unit. Because Avalon has reached out to Hawk, no variable selling costs will be incurred with the special order. Should Hawk Inc. accept the special order? Show calculations to support your answer. b. Suppose Hawk is operating at full capacity. If Hawk Inc. accepts Avalon's special order what is the change in Operating Income? Indicate if the change is an increase or decrease.

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