Leno Company manufactures toasters. For the first 8 months of 2014, the company

Question

Leno Company manufactures toasters. For the first 8 months of 2014, the company reported the following operating results while operating at 75% of plant capacity:

Sales (349,400 units) $4,378,700

Cost of goods sold 2,601,300

Gross profit 1,777,400

Operating expenses 839,000

Net income $938,400

Cost of goods sold was 68% variable and 32% fixed; operating expenses were 73% variable and 27% fixed. In September, Leno Company receives a special order for 19,700 toasters at $7.89 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,100 of shipping costs but no increase in fixed operating expenses.

Prepare an incremental analysis for the special order.

Explanation / Answer

Incremental Analysis

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