Moonbeam Company manufactures toasters. For the first 8 months of 2022, the company reported the following operating results while operating at 75% of plant capacity:

Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Moonbeam receives a special order for 15,000 toasters at $7.60 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed costs.

Instructions
a. Prepare an incremental analysis for the special order.
b. Should Moonbeam accept the special order? Why or why not?

Transcribed Image Text:

Sales (350,000 units) Cost of goods sold Gross profit Operating expenses Net income $4,375,000 2,600,000 1,775,000 840,000 $935,000