. Alice Company has received a special order from John. John wishes to buy 100 units of Alice's product at a price of $48. The regular price is $65. The unit cost information follows:

Direct materials 10
Direct labor 12
Variable overhead 13
Fixed manufacturing overhead 15
$50

Alice's total fixed costs will remain the same, even though Alice makes more units of the product. However, to satisfy the special order, Alice has to use a special material. That will increase the direct materials cost by $4 per unit. Also some special processing tool should be rented for $700.

If Alice accepts the special order from John, Alice's profit will:
- Increase or Decrease [choose one]
- By what amount?

Innovan Company is considering replacing its old machine. The machine was purchased 2 years ago at the price of $20,000. It has been depreciated $10,000 a year, and has one more year of useful life. Its current book value $10,000. The machine incurs a $6,000 operating costs per year. At the end of its useful life, its salvage value will be $0. However, at this time, the machine can be sold for $7,000.
The company can buy a new machine for $8,000. It can be used for 1 year and at the end of its life there will be no salvage value. If the new machine incurs a $4,500 operating costs per year.

Compare "Keep" (keep using the old machine) and "Replace" (buy new machine to replace the old one). In terms of profit, "Keep" is:
- Better or Worse [choose one]
- By what amount?