Tobitzu TV produces wall mounts for flat panel television sets. The forecasted i

Question

Tobitzu TV produces wall mounts for flat panel television sets. The forecasted income statement for 2015 is as follows:

Additional Information
(1) Of the production costs and selling expenses, $600,000 and $100,000, respectively, are fixed. (2) Tobitzu TV received a special order from a hospital supply company offering to buy 12,000 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $32 to make a product to sell for $30."

Calculate the net benefit (cost) of accepting the special order.

TOBITZU TV
Budgeted Income Statement
For the Year 2015 Sales ($49 per unit) $4,900,000 Cost of good sold ($32 per unit) (3,200,000) Gross profit 1,700,000 Selling expenses ($4 per unit) (400,000) Net income $1,300,000

Explanation / Answer

sales 4900000 no of unit per unit rate per unit price 49 selling price 12000 30 360000 no of units 100000 variable cost 12000 26 312000 gross profit 48000 cost of goods sold 3200000 selling price 12000 3 36000 fixed cost 600000 net profit 12000 variable cost 2600000 no of units 100000 variable cost per unit 26 selling price 400000 fixed selling price 100000 variable selling price 300000 no of units 100000 selling price per unit 3

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