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5 Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted income statement for April,
5 Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted income statement for April, when she expects to produce and sell 2,200 meals: 3.33 points Sales revenue eBook Costs of meals produced Gross profit Administrative costs Operating profit Amount $ 11,440 3,020 $2,430 1,100 Per Unit $5.20 4.10 $1.10 $ 1,330 0.50 $0.00 Fixed costs included in this income statement are $3,124 for meal production and $440 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.10 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected. Required: a. What impact would accepting this special order have on operating profit? (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Status Quo 2,200 Units Alternative 2,500 Units Sales revenue s 11,440 5 12.370 5 Difference 930 higher Variable costs Meals Administrative 6,600 660 7500 660 900 higher none Contribution margin Fixed costs 3,564 3.564 Onane Operating prof b. From an operating profit perspective for April, should Maria accept the order?
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