Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into

Question

Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,047,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows.

Per Undergarment Total Direct materials $1.91 $1,999,770 Direct labor 0.45 471,150 Variable manufacturing overhead 1.07 1,120,290 Fixed manufacturing overhead 1.59 1,664,730 Variable selling expenses 0.33 345,510    Totals $5.35 $5,601,450 Reject Order Accept Order Net Income Increase (Decrease) Revenues Variable costs: Direct materials IirecS kibor Variable overhead Total variable costs Net income Should Klean Fiber accept the Army's offer? Klean Fiber should the Army's offer. Click if you would acept reject how Work for this question Open Show Work

Explanation / Answer

Reject Order Accept Order Net Income Increase/Decrease Revenues 0 1115615 1115615 Variable costs: Direct materials 0 478837 -478837 Direct labor 0 112815 -112815 Variable overhead 0 268249 -268249 Total Variable costs 0 859901 -859901 Net income 0 255714 255714 Klean fiber should accept the Army's offer

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