The parts of this question must be completed in order. This part will be availab
ID: 2507905 • Letter: T
Question
The parts of this question must be completed in order. This part will be available when you complete the part above.
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 (350,700 units) $4,372,000 Cost of goods sold 2,593,200 Gross profit 1,778,800 Operating expenses 839,700 Net income $939,100
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed.
In September, Leno Company receives a special order for 24,100 toasters at $8.30 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $2,920 of shipping costs but no increase in fixed operating expenses. 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 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed. In September, Leno Company receives a special order for 24,100 toasters at $8.30 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $2,920 of shipping costs but no increase in fixed operating expenses. Prepare an incremental analysis for the special order. (Round computations for per unit cost to 4 decimal places, e.g. 15.2500 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Explanation / Answer
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 (350,000 units)
$4,375,000
Cost of goods sold
2,600,000
Gross profit
1,775,000
Operating expenses
840,000
Net income
$935,000
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed.
In September, Leno Company receives a special order for 15,000 toasters at $7.60 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed operating expenses.
Reject
Order
Accept
Order
Net Income
Increase
(Decrease)
Revenues
114000
114000
Cost of goods sold
81000
81000
Operating expenses
27000
27000
Net income
6000
6000
Leno should
Sales (350,000 units)
$4,375,000
Cost of goods sold
2,600,000
Gross profit
1,775,000
Operating expenses
840,000
Net income
$935,000
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