Leno Company manufactures toasters. For the first 8 months of 2014, the company
ID: 2466164 • 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: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.
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
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