A.)Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,031,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $2.04 $2,103,240 Direct labor 0.40 412,400 Variable manufacturing overhead 1.04 1,072,240 Fixed manufacturing overhead 1.44 1,484,640 Variable selling expenses 0.34 350,540 Totals $5.26 $5,423,060 The U.S. Army has approached Klean Fiber and expressed an interest in purchasing 250,100 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a profit. Presently, Klean Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Klean Fiber accepts the Armys offer, it will not incur any variable selling expenses related to this order.

B.) Moonbeam Company manufactures toasters. For the first 8 months of 2017, the company reported the following operating results while operating at 75% of plant capacity:

Sales (349,200 units)		$4,375,000
Cost of goods sold		2,595,000
Gross profit		1,780,000
Operating expenses		839,300
Net income		$940,700

Cost of goods sold was 77% variable and 23% fixed; operating expenses were 87% variable and 13% fixed. In September, Moonbeam Company receives a special order for 18,500 toasters at $8.03 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. (a) Prepare an incremental analysis for the special order. (Round computations for per unit cost to 4 decimal places, e.g. 15.2567 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Reject Order Accept Order Net Income Increase (Decrease) Revenues Variable costs: Direct materials Direct labor Variable overhead Total variable costs Net income Should Klean Fiber accept the Army's offer? Klean Fiber should the Army's offer