Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating
Question:
Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating results while operating at 75% of plant capacity.
Sales (400,000 units) ... .$4,000,000
Cost of goods sold .....2,400,000
Gross profit ........1,600,000
Operating expenses ...... 900,000
Net income .........$ 700,000
Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 60% variable and 40% fixed.
In September, Wyco Company receives a special order for 40,000 toasters at $6.00 each from Salono Company of Mexico City. Acceptance of the order would result in $8,000 of shipping costs but no increase in fixed operating expenses.
Instructions
(a) Prepare an incremental analysis for the special order.
(b) Should Wyco Company accept the special order? Why or why not?
Step by Step Answer:
a Reject Order Accept Order Net Income Increase Decrease Revenues 4...View the full answer
Accounting Tools For Business Decision Making
ISBN: 9780470377857
3rd Edition
Authors: Paul D. Kimmel
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