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BCGelco Manufacturing produces and sells oil fibers for $3.35 each. Aretailer has offered to purchase 10.000 oil filters for $3 10 per filter Of the
BCGelco Manufacturing produces and sells oil fibers for $3.35 each. Aretailer has offered to purchase 10.000 oil filters for $3 10 per filter Of the total manufacturing cost per Ster of $205, $1.20 is the variable manufacturing cost per filter For this special order, BCGelco would have to buy a special stamping machine that costs $8,000 to mark the cuntomer's logo on the special-order oil Sters. The machine would be scrapped when the special order is complete. This special order would use manufacturing capacity that would otherwise be idle. No variable nonmanufacturing costs would be incurred by the special order. Regular sales would not be affected by the special order Would you recommend that BCGelco accept the special order under these conditions? Complete the following incremental analysis to help you make your recommendation (Use parentheses or a minus sign to indicate a decrease in operating incomelom the special order) Incremental Analysis of Special Sales Order Decision Per Unit Total Order (10,000 units) Revenue from special order Less variable expense associated with the order Fired manufacturing cost not associated with the special order Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order
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