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Analyzing one company's make or buy and special order proposalsOneCo is a retail organization in the Northeast that sells upscale clothing. Each year, store managers $($in consultation with their supervisors$)$ establish financial goals; a monthly reporting system captures actual performance.OneCo Inc. produces a single product. Cost per unit, based on the manufacture and sale of $10,000$ units per month at full capacity, is shown below.Product costsDirect materials$$4\mathrm{.}00$Direct labor$1\mathrm{.}30$Variable overhead$2\mathrm{.}50$Fixed overhead$3\mathrm{.}40$Sales commission$0\mathrm{.}90$$$12\mathrm{.}10$The $$0\mathrm{.}90$ sales commission is paid for every unit sold through regular channels. Market demand is such that OneCo is operating at full capacity, and the firm has found it can sell all it can produce at the market price of $$16\mathrm{.}50.$Currently, OneCo is considering two separate proposals:$$ Gatsby, Inc. has offered to buy $1,000$ units at $$14\mathrm{.}35$ each. Sales commission would be $$0\mathrm{.}35$ on this special order.$$ Zelda Productions, Inc. has offered to produce $1,000$ units at a delivered cost to OneCo of $$14\mathrm{.}50$ each.Note: Do not use negative signs with any of your answers.a$.$ What would be the effect on OneCo's operating income if it accepts the proposal from Gatsby, but rejects the proposal from Zelda?Operating income would Answer $1$ by $Answer $2.$b$.$ What would be the effect on OneCo's operating income if it accepts the proposal from Zelda, but rejects the proposal from Gatsby?Operating income would Answer $3$ by $Answer $4.$c$.$ What would be the effect on OneCo's operating income if it accepts both proposals?Operating income would Answer $5$ by $Answer $6.$d$.$ Assume Gatsby has offered a second proposal to purchase $2,000$ units at the market price of $$16\mathrm{.}50,$ but has requested product modifications that would increase materials cost by $$0\mathrm{.}30$ per unit and increase direct labor and variable overhead by $15\%.$ The sales commission would be $$0\mathrm{.}35$ per unit. Should OneCo accept this order? Why or why not?Answer $7.$ Operating income would Answer $8$ by $Answer $9.$e$.$ Assume OneCo had excess capacity. What would be the effect on OneCo's operating income if it accepts the Gatsby proposal described in d$.?$ Assume no additional fixed costs would be generated.Operating income would Answer $10$ by $Answer $11$

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