Assignment Gradebook ORION Downloadable eTextbook nment NEXT Question 1 Moonbeam

Question

Assignment Gradebook ORION Downloadable eTextbook nment NEXT Question 1 Moonbeam Company manufactures toasters. For the first 8 months of 2 capacity 017, the company reported the following operating results while operating at 75% of plant Sales (349,200 units) $4,375,000 Cost of goods sold2,595,000 Gross profit Operating expenses Net income 1,780,000 839,300 $940,700 Cost of goods sold was 77% variable and 23% fixed; operating expenses were 87% variable and 13% fixed. In September, Moonbeam Company receives a special order for 18,500 toast result in an additional $3,000 of shipping costs but no increase in fixed costs. ers at s8.03 each from Luna Company of Ciudad Juarez. Acceptance of the order would 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 and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign p parentheses e.g. (45).) computations Reject Order Accept Order Net Income Increase (Decrease) Revenues Cost of goods sold

Explanation / Answer

Solution:

Variable cost of goods sold per unit = $2,595,000 * 77% / 349200 = $5.7220

Variable Operating expenses per unit = $839,300*87% / 349200 = $2.0910

As special order will result in additional income of $1,014, therefore special order should be accepted.

Incremental Analysis - Moonbeam Company Particulars Reject Order Accept Order Net Income Increase (Decrease) Revenues $0 $148,555 $148,555 Cost of goods sold $0 $105,857 $105,857 Variable operating expense $0 $38,684 $38,684 Additional shipping cost $0 $3,000 $3,000 Net Income $0 $1,014 $1,014

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