Please help explain

Question

A manufacturer of motorcycle batteries has a plant capacity of 100,000 per year. Overhead costs are $500,000 per year. Variable costs are $10 per unit. Sales have been running at 50,000 per year at a wholesale price of $25 each. Recently, a large department store offered to purchase an additional 50,000 batteries a year at $20 each. (a) Should they take the offer? Explain why or why not. (b) Suppose the department store offered to buy the entire output for $15. Should they take the offer? Explain why or why not

Answer 1

a) no because the company earns less
b) yes, because they company would earn more