Please clearly break down this question for me using an excel sheet if possible.
ID: 2491447 • Letter: P
Question
Please clearly break down this question for me using an excel sheet if possible. I would like to see how to work this problem for future reference, thank you so much in advance! :)
Calla Company produces skateboards that sell for $58 per unit. The company currently has the capacity to produce 100,000 skateboards per year, but is selling 80,200 skateboards per year. Annual costs for 80,200 skateboards follow Direct materials Direct labor Overhead Selling expenses Administrative expenses $922,300 665,660 949,000 555,000 469,000 Total costs and expenses $3,560,960 A new retail store has offered to buy 19,800 of its skateboards for $53 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following ·Direct materials and direct labor are 100% variable 40 percent of overhead is fixed at any production level from 80,200 units to 100,000 units; the remaining 60% of annual overhead costs are variable with respect to volume ·Selling expenses are 60% variable with respect to number of units sold, and the other 40% of selling expenses are fixed There will be an additional $1.8 per unit selling expense for this order. Administrative expenses would increase by a $980 fixed amount. Required Prepare a three-column comparative income statement that reports the following a. Annual income without the special order b. Annual income from the special order c. Combined annual income from normal business and the new business (Do not round your intermediate calculation round your cost and expenses values to nearest whole decimal places.)Explanation / Answer
Calla Company Normal Additional Combined Volume Volume Total Sales 4651600 5701000 10352600 Costs and Expenses Direct Materials 922300 1150000 2072300 Direct Labor 665660 830000 1495660 Overhead 949000 1089500 2038500 Selling Expenses 555000 672852 1227852 Administrative Expenses 469000 469980 938980 Total Costs and Expenses 3560960 4212332 7773292 Operating Income 1090640 1488668 2579308 Direct Material 922300/80200 11.5 Direct Labor 665660/80200 8.3 Selling Expenses 555000*60% 333000 333000/80200 4.15212 1.8 Total for 19800 units 5.95212 Fixed Selling 222000 Overhead Variable 949000*60% 569400 7.099751 Fixed 379600