Refer to our development of Framecraft Company’s master budget in this chapter. Suppose that because of a new customer in Canada, the company or management has decided to increase budgeted sales in the first quarter by 5,000 units. The expenses for this sale will include direct materials, direct labor, variable overhead, and variable selling and administrative expenses. The delivery expense for the Canadian customer will be $0.18 per unit rather than the regular $0.08 per unit. The desired units of beginning finished goods inventory will remain at 1,000 units.

1. Using an Excel spreadsheet, revise Framecraft Company’s budgeted income statement and the operating budgets that support it to reflect the changes described above. (Round manufactured cost per unit to three decimals.)

2. What was the change in income from operations? Would you recommend accepting the order from the Canadian customer? If so, why?