Exercise 20-3 Your answer is partially correct. Try again Moonbeam Company manuf

Question

Exercise 20-3 Your answer is partially correct. Try again Moonbeam Company manufactures toasters. For the first 8 months of 2017, the company reported the following operating results while operating at 75% of plant capacity: Sales (349,900 units) $4,373,000 Cost of goods sold Gross profit Operating expenses Net income 2,602,000 1,771,000 839,800 $931,200 Cost of goods sold was 74% variable and 26% fixed; operating expenses were 84% variable and 16% fixed. In September, Moonbeam Company receives a special order for 20,800 toasters at $8.48 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed costs.

Explanation / Answer

(a)

(b) Moonbeam Company should accept the special order.

Reject Order Accept Order Net Income Increase (Decrease) Revenues 0     176,384         176,384 Cost of goods sold 0 (114,461)      (114,461) Operating expenses 0     (44,935)         (44,935) Net income 0        16,988           16,988

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