Leno Company manufactures toasters. For the first 8 months of 2014, the company

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:
Sales (350,600 units) $4,376,100 Cost of goods sold 2,605,000 Gross profit 1,771,100 Operating expenses 840,000 Net income $931,100
Cost of goods sold was 67% variable and 33% fixed; operating expenses were 72% variable and 28% fixed.

In September, Leno Company receives a special order for 17,700 toasters at $8.3 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.

Explanation / Answer

Particulars Reject Order Accept Order Net Income Increase/( Decrease) Revenues          43,76,100          45,23,010                                                    1,46,910 Cost Of Goods sold          26,05,000          26,93,114                                                       88,114 Gross Profit          17,71,100          18,29,896                                                       58,796 Operating Expenses            8,40,000            8,70,533                                                       30,533 Additional Shiipin Cost                         -                    3,000                                                          3,000 Net Income            9,31,100            9,56,363                                                       25,263

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