CALCULATORFULL SCREEN PRINT TER VERSION BACK NE Exercise 7-3 Moonbeam Company ma

Question

CALCULATORFULL SCREEN PRINT TER VERSION BACK NE Exercise 7-3 Moonbeam Company manufactures toasters. For the first 8 months of 2017, the company reported the following operating results while operating at 75% of plant capacity: Sales (349,400 units) $4,372,000 Cost of goods sold Gross profit Operating expenses840,000 Net income 2,595,000 1,777,000 $937,000 Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Moonbeam Company receives a special order for 17,500 toasters at $7.90 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,100 of shipping costs but no increase in fixed costs. 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. Reject Order Accept Order Net Income Increase (Decrease) Revenues Cost of goods sold olicy 2000-2018.J0hn Wiley &Sans; In. All Rights Reserved. A Division of 2ohn Wiley& SonaInc. Version 4.24.

Explanation / Answer

a) Incremental analysis :

b) Moonbeam company should accept the special order.

Reject order Accept order Net income increase (decrease) Revenue 0 138250 138250 Cost of goods sold 0 -90981 -90981 Operating expense 0 -36758 -36758 net income 0 10511 10511

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