Check Your Work 061 point Mchave Corp. makes several varieties of beach umbrella

Question

Check Your Work 061 point Mchave Corp. makes several varieties of beach umbrellas and accessories it has been approached by a company called Lost Mine Industries abou producing a special order for a custom Lost Mine has offered to buy 1,900 of the US umbrelas at a price of s15each Mohave ourrenity has the excess capacity necessary to accept the ofr The following intlormation is related to Reguiar sales price 1. Compute the incremental pot (or loss)fhom accepting the special order 2Should Mchave accepl the special order? O Yes is command option | option command

Explanation / Answer

Per unit Total 1900 units Incremental revenue 15 28500 Incremental costs: Variable costs: Direct materials 7 13300 Direct labor 3 5700 Variable manufacturing overhead 3 5700 Total variable cost 13 24700 Incremental net operating income(loss) 3800 Profit increases by $3800 2 Yes 3 Per unit Total 2400 units Incremental revenue 10 24000 Incremental costs: Variable costs: Direct materials 7 16800 Direct labor 3 7200 Variable manufacturing overhead 3 7200 Total variable cost 13 31200 Incremental net operating income(loss) -7200 Profit decreases by $7200 4 Special order price = $23

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