$12-34$ Special order, short$-$run pricing. Diamond Corporation produces baseball bats for kids that it sells for $$37$ each. At capacity, the company can produce $54,000$ bats a year. The costs of producing and selling $54,000$ bats are as follows: Direct materials Variable direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total costs Required Cost per Bat $$1442523$ $$30$ Total Costs $ $756,000216,000108,000270,000108,000162,000$ $$1,620,0001.$ Suppose Diamond is currently producing and selling $44,000$ bats. At this level of production and sales, its fixed costs are the same as given in the preceding table. Home Run Corporation wants to place a one$-$time special order for $10,000$ bats at $$21$ each. Diamond will incur no variable sell$-$ing costs for this special order. Should Diamond accept this one$-$time special order? Show your calculations. $2.$ Now suppose Diamond is currently producing and selling $54,000$ bats. If Diamond accepts Home Run$$s offer, it will have to sell $10,000$ fewer bats to its regular customers. $($a$)$ On financial considerations alone, should Diamond accept this one$-$time special order? Show your calculations. $($b$)$ On financial considerations alone, at what price would Diamond be indifferent between accepting the special order and continuing to sell to its regular customers at $$37$ per bat. $($c$)$ What other factors should Diamond consider in deciding whether to accept the one$-$time special order?

$12-46$ Closing down divisions. Ainsley Corporation has four operating divisions. The budgeted rev$-$enues and expenses for each division for $2020$ follow:

Division A Sales Cost of goods sold

Selling, general, and administrative expenses Operating income$/$loss

B

$$504,000$ $ $948,000440,00096,000$

$ $(32,000)$

$930,000202,500$

$$(184,500)$ C D

$$960,000$ $$1,240,000765,000144,000$ $ $51,000$

$925,000210,000$

$ $105,000$

Further analysis of costs reveals the following percentages of variable costs in each division: Cost of goods sold

Selling, general, and administrative expenses

$90\%50\%$

$80\%50\%$

$90\%60\%$

Required

$85\%60\%$

Closing down any division would result in savings of $40\%$ of the fixed costs of that division. Top management is very concerned about the unprofitable divisions $($A and B$)$ and is considering clos$-$ing them for the year. $1.$ Calculate the increase or decrease in operating income if Ainsley closes division A$.2.$ Calculate the increase or decrease in operating income if Ainsley closes division B$.3.$ What other factors should the top management of Ainsley consider before making a decision?

Please show all calculations for both problems.