Leno Company manufactures toasters. For the first 8 months of 2014, the company
ID: 2415989 • Letter: L
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 65% variable and 35% fixed; operating expenses were 70% variable and 30% fixed.
In September, Leno Company receives a special order for 15,000 toasters at $7.5 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.
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).)
Sales (350,000 units) $4,375,000 Cost of goods sold 2,590,000 Gross profit 1,785,000 Operating expenses 839,000 Net income $946,000Explanation / Answer
Special order should be accepted Statement showing computations Particulars Reject Order Accept Order Net Income Increase(Decrease) Sales 4,375,000.00 4,487,500.00 112,500.00 Variable COGS =2590,000*.65 1,683,500.00 1,755,650.00 72,150.00 Variable Operating Exp=839000*.70 587,300.00 612,470.00 25,170.00 Contribution = Sales - VC 2,104,200.00 2,119,380.00 15,180.00 Fixed Costs: Fixed COGS 906,500.00 906,500.00 - Fixed Operating exp 251,700.00 251,700.00 - Shipping Costs 3,000.00 3,000.00 Total Fixed Costs 1,158,200.00 1,161,200.00 3,000.00 Income 946,000.00 958,180.00 12,180.00 Additional Variable COGS = 1683500/350,000*15000 72,150.00 Additional Variable Op Exp =587,300/350000*15000 25,170.00 97,320.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.