Wyco Company manufactures toasters. For the first 8 months of 20 11, t he compan

Question

Wyco Company manufactures toasters. For the first 8 months of 20 11, t he company reported the following operating results while operating at 75o/o of plant capacity. Cost of goods sold was 6 60/o variable and 34% fixed. Operating expenses were also 66% variable and 340/o fixed. In September, Wyco Company receives a special order for 41,000 toasters at $6.60 each from Ortiz Company of Mexico City .Acceptance of t he order would result in $8,050 of shipping costs but no increase in fixed operating expenses. Complete the incremental analysis for the special order.

Explanation / Answer

reject order revenues=4016300 less cost of good sold=2398560 gross profit=1617740 less:operating expenses=895590 net income=722150 accept order selling price per unit=4016300/401630=10 per unit revenues (442630*10)4426300 less cost of good sold (3.942*442630)+815510=2560357 gross profit=1865943 less operating expenses (1.472*442630)+304500+8050=964101 net profit=901842 net increase 901842-722150=179692 wyco company should accept the special offer because it increases net profit by 179692

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