Snapper company has plently of excess capcity to accept a special order. Shown b

Question

Snapper company has plently of excess capcity to accept a special order. Shown below is an what if analysis of the special order. Which of the following is the correct decision and reason.

A. No, the company will only break even... B. No since only the empoyees will benfit from this is that they will earn more overtime. C. Yes, since the goal is to fill capacity as mucha s possible to keep fixed OH varainces as low as possible... D. Yes, since operating profits will most likely increase.

Status Quo With speical order Sales 128,000 133,000 Variable costs: Manufacturing 51,200 54,400 Selling and administrative 25,600 26,600 CM 51,200 52000 Fixed Costs 19,200 19,200 Operating profit 32,000 32,800

Explanation / Answer

By view of this statement company's operating profit is increases by special order.

By Special order operating profit will increase by (32800-32000) = 800

so answer should be d) Yes, since operating profits will most likely increase.

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