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edugen.wileyplus.com /edugen/shared assignment/test/qprint.un Print by: Hailing He 2016 Spring ACC 202 33722 F2F TR 9:15 am 10:30 am (Young) Chapter 26 HW Part III Question 1 Billings Company manufactures toasters. For the first 8 months of 2013, the company reported the following operating results while operating at 75% of plant capacity. sales (402,300 units) $4,103,460 2,454,030 Cost of goods sold 1,649,430 Gross profit operating expenses 885,060 764,370 Net income Cost of goods sold was 70% variable and 30 fixed. Operating expenses were 50% variable and 50% fixed. In September, Billings Company receives a special order for 43,000 toasters at $7.60 each from Del Carpio Company of Lima, Peru. Acceptance of the order would result in $7,920 of shipping costs but no increase in fixed operating expenses. (a) Prepare an incremental analysis for the special order. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in a other columns as positive and subtract where necessary.) Net Income Reject Accept Increase Order Order (Decrease) S Revenues Cost of goods sold Operating expenses Net income (b) Should Billings Company accept the special order? L Question Attempts: 0 of 4 used

Explanation / Answer

SInce the new order is generating a profit of $56580 , the New Order should be accepted.There will be incremental net profit of $56580.

b) Yes the order should be accepted.

Revenue(43000x7.60) 326800 Cost of Goods Sold(2454030/402300) = 6.1 x43000 (262300) Operating Expenses (7920) Net Income $56580

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