Moonbeam Company manufactures toasters. For the first 8 months of 2017, the comp

Question

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 (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 80% variable and 20% fixed. In September, Moonbeam Company receives a special order for 15,000 toasters at $7.60 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed costs. (a) Prepare an incremental analysis for the special order.

Explanation / Answer

(a) Prepare an incremental analysis for the special order.

Incremental revenue (15000*7.60) 114000 Incremental cost Cost of goods sold (2600000*70%/350000*15000) (78000) Operating expense (840000*80%/350000*15000)+3000 (31800) Total incremental cost (109800) Incremental profit 4200

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

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