Question
Coffe beans Inc manufactures coffee makers. For the first seven months of 2015, the company reported the following operating results while operating at 80% of
Coffe beans Inc manufactures coffee makers. For the first seven months of 2015, the company reported the following operating results while operating at 80% of plant capacity: Sales (500,000 units) $90,000,000 Cost of goods sold 54,000,000 Gross profit 36,000,000 Operating expenses 24,000,000 Net income $12,000,000 An analysis of costs and expenses reveals that variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In August, the company receives a special order for 40,000 machines at $135 each from a major customer. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses. Instructions 1.Prepare an incremental analysis for the special order. 2.Should Coffe beans Inc. accept the special order? Explain your answer.
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