Consider the following details of the income statement of the Madrid Pen Company (MPC) for the year ended December 31, 2010 (Click the icon to view the income statement) MPC's fixed manufacturing costs were $36 million and its fixed selling and administrative costs were 533 million Sala commissions of 3% of sales are included in saling and administrative expenses. The division had produced and sold 3 million pens Cick the icon to view information on an offer from Heavenly Pizza) Read the reements Units Sales Less variable expenses Manufacturing Selling and administrative Total variable expenses Contribution mergin Less fixed expenses Manufacturing Selling and administrativ Total fad expenses Operating income Special Order 3 D E Consider the following details of the income statement of the Madrid Pen Company (MPC) for the year ended Dec 31,20x0 Sales Less COGS Gross margin or gross profit Less selling and administrative expenses Operating Income 2 3 Requirements: 4 16 MPC's fixed manufacturing costs were $3.6 million and its fixed selling and administrative costs were $3.3 million. Sales commissions of 3% of sales are included in selling and administrative expenses. The division had produced and sold 13 million pens. 18 19 20 Units 21 Sales 22 Less variable expenses: 1. Using the contribution-margin technique, prepare an analysis. Use four columns without the special order, the effect of the special order (one column total and one column per unit), and totals with the special order. 5 2. By what percentage would operating income increase or decrease if the order had been accepted? Do you agree with the president's decision? Why? 23 Manufacturing 24 Selling and administrative 25 Total variable expenses $16,500,000 $9,450,000 $7,050,000 $4,350,000 $2,700,000 26 Contribution margin 27 Less fixed expenses: 28 Selling and administrative 29 Total fixed expenses 30 Operating Income 31 Without Special order ? ? 2 12 ? ? ? ? ? ? I ? ?