Berry

Company produces and sells

30,000

cases of fruit preserves each year. The following information reflects a breakdown of its costs:

COST ITEM	COST PER CASE	TOTAL COSTS
Variable production costs		$13		$390,000
Fixed production costs		5		150,000
Variable selling costs		6		180,000
Fixed selling and administrative costs		10		300,000
Total costs		$34		$1,020,000

Berry

marks up its prices 40% over full costs. It has surplus capacity to produce

20,000

more cases. A French supermarket company has offered to purchase

10,000

cases of the product at a special price of

$42

per case.

Berry

will incur additional shipping and selling costs of

$4

per case to complete this order.

Requirement

What will be the effect on

Berry's

operating income if it accepts this order?

Requirement What will be the effect on

Berry's

operating income if it accepts this order?

Begin by determining the contribution margin per unit for this order. (Use parentheses or minus sign to show a negative contribution margin per unit.)

Less:
Contribution margin per unit