And please post the steps you followed to get to the right answer. Thank you Dav

Question

And please post the steps you followed to get to the right answer. Thank you Davis, Managerial Accounting, 3e & Practice Gradebook ORION Downloadable eTextboek Assignment RCES Exercise 8-5 X Your answer is incorrect. Try again. Culver Manufactur ng has an annual capacity of 80 200 units per year. Currently, the company is making and sel ing 78 700 uns· special order By how much will Culver's income change if the company accepts this order? year. The normal sales price is $104perunt, variable costs are 565 per unit, and total fixed expenses are $2,000,000. An out-of-state distributor has offiered to buy 5,300 units at $70 per unit. Culiver's cost structure should not change as a result of this Study Culver net income will by f it accepts the special order. Click if you would like to Show Work for this question: Open Show Work Question Attemptsi 1 of 5 used SAVE FOR LATER 10 20

Explanation / Answer

Existing net income Particulars Amount a Sales(78700*104) 8184800 b less: variable cost@$65 per unit (5115500) c contribution margin(a-b) 3069300 d less:Fixed cost (2000000) e net income(c-d) 1069300 Net Income if special order is accepted Particulars Existing order@$104 Special order@$70 (74900 units) (5300 units) a sales 7789600 371000 b less: variable cost@$65 per unit (4868500) (344500) c contribution margin(a-b) 2921100 26500 d less:Fixed cost (2000000) 0 e net income(c-d) 921100 26500 total net income = 921100+26500 = $947,600 Decrease in net income = 1069300-947600 = $121,700 Therefore Culver Net income will Decrease by $121,700

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