Markson Company had the following results of operations for the past year: A for

Question

Markson Company had the following results of operations for the past year:

A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $12.80 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,520 for the purchase of special tools. If Markson accepts this additional business, its profits will

Sales (8,000 units at $19.20) $153,600 Variable manufacturing costs $82,800 Fixed manufacturing costs 14,200 Variable selling and administrative expenses 8,800 Fixed selling and administrative expenses 19,200 (125,000) Operating income $28,600

Explanation / Answer

If company accepted special order, they can earn an additional profit of $1,180

Incremental Revenue (2,000*$12.80) $ 25,600 Incremental Costs Variable Manufacturing cost (2,000 * ($82,800/8,000)) $ 20,700 Fixed manufacturing overhead $    1,520 Variable selling and administrative expense (2,000*($8,800/8,000)) $    2,200 Total Incremental Cost $ 24,420 Incremental Net operating Income $    1,180

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---