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 (350,700 units) $4,375,400 Cost of goods sold 2,594,000 Gross profit 1,781,400 Operating expenses 839,100 Net income $942,300 Cost of goods sold was 71% variable and 29% fixed; operating expenses were 76% variable and 24% fixed. In September, Leno Company receives a special order for 15,200 toasters at $7.6 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).) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ $ $ Cost of goods sold Operating expenses Net income $ $ $ LINK TO TEXT Should Leno Company accept the special order? Leno should the special order.

Explanation / Answer

Statement showing computations Particulars Amount per unit = Total/350,700 Reject Order Accept Order Net Income Increase (Decrease) Revenues                    12.48      4,375,400.00      4,490,920.00         115,520.00 Variable Cost: Cost of Goods Sold                      5.25      1,841,740.00      1,921,564.49            79,824.49 Operating Expense                      1.82         637,716.00         665,355.82            27,639.82 Total Variable Costs                      7.07      2,479,456.00      2,586,920.30         107,464.30 Contribution = Revenues- VC                      5.41      1,895,944.00      1,903,999.70              8,055.70 Fixed Costs Cost of Goods Sold         752,260.00         752,260.00                           -   Operating Expense         201,384.00         201,384.00                           -   Shipping costs              3,000.00              3,000.00 Total Fixed Costs         953,644.00         956,644.00              3,000.00 Income           942,300.00         947,355.70              5,055.70 Yes OrderShould be accepted

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