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: Cost of goods sold was 71% variable and 29% fixed; operating expenses were 76% variable and 24% fixed. In September, Leno Company receives a special order for 17,700 toasters at $8.2 each from Centro Company of Ciudad Juarez. Acceptance of the order would result m an additional $3,000 of shipping costs but no increase in fixed operating expenses. Prepare an incremental analysis for the special order.

Explanation / Answer

Leno Company Cost Details Units sold                351,800 Details Per unit Total Sales revenue                     12.45          4,381,400 Variable costs Cost Of Goods Sold                       5.25          1,846,710 Operating Expenses                       1.81             638,248 Total Variable cost                       7.06          2,484,958 Contribution Margin                       5.39    1,896,442.00 Fixed cost COGS             754,290 Operating Expenses             201,552 Total Fixec Cost             955,842 Net Operating Income             940,600 Special Order Profitability Units                  17,700 Reject Order Accept Order Net Income Increase/(Decrease) Revenues@8.2                            -               145,140            145,140 Variable COGS @5.25 /unit                            -                  92,925            (92,925) Variable operating cost@1.81/unit                            -                  32,112            (32,112) Shipping Cost                            -                    3,000              (3,000) Net Income Increase              17,103

Related Questions

Navigate

• Browse (All)
• Browse L
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.