Calla Company produces skateboards that sell for $63 per unit. The company curre

Question

Calla Company produces skateboards that sell for $63 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 80,400 skateboards per year. Annual costs for 80,400 skateboards follow.

A new retail store has offered to buy 14,600 of its skateboards for $58 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following:

Direct materials and direct labor are 100% variable.

40 percent of overhead is fixed at any production level from 80,400 units to 95,000 units; the remaining 60% of annual overhead costs are variable with respect to volume.

Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are fixed.

There will be an additional $1.20 per unit selling expense for this order.

Administrative expenses would increase by a $940 fixed amount.

Required:
Prepare a three-column comparative income statement that reports the following:

a. Annual income without the special order.
b. Annual income from the special order.
c. Combined annual income from normal business and the new business. (Do not round your intermediate calculations. Round your cost and expenses to nearest whole number.)

The answers on the chart is wrong.. please help

Direct materials $ 924,600 Direct labor 683,400 Overhead 958,000 Selling expenses 558,000 Administrative expenses 468,000 Total costs and expenses $ 3,592,000 CALLA COMPANY COMPARATIVE INCOME STATEMENTS Additional Combined Normal Volume Volume Sales 5,547,600$ 934,400 6,482,000 Costs and expenses: Direct materials Direct labor Overhead 164,980 105,120 164,991 105,127 Selling expenses Total costs and expenses Operating income 18 1 $ 5,547,582 $ 664,300 $ 6,211,882 270,100 270,118

Explanation / Answer

the following is the working for above amounts:

sales 5,065,200 846,800 5,912,000 cost and expenses direct materials 924,600 167,900 1,092,500 direct labour 683,400 124,100 807,500 overhead 958,000 104,379 1,062,379 selling expenses 558,000 88,450 646,450 administrative expenses 468,000 940 468,940 total cost and expenses 3,592,000 485,769 4,077,769 operating income 1,473,200 361,031 1,834,231

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