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Cotton Products manufactures t-shirts. It has the following costs when its production level is 110,000 units (t-shirts): (Click the icon to view the costs.)
Cotton Products manufactures t-shirts. It has the following costs when its production level is 110,000 units (t-shirts): (Click the icon to view the costs.) (Click the icon to view additional information.) What will happen to Cotton's operating income if it accepts this special order? Complete the following incremental analysis to determine the impact on Cotton's operating income if it accepts this special order. (Round all per unit amounts to the nearest cent, $X.XX, and all other amounts to the nearest whole dollar. Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order.) Incremental Analysis of Special Sales Order Decision Per Unit Total Order (11,000 units) Revenue from special order Less variable expense associated with the order: Direct materials Direct labor Variable manufacturing overhead Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Cotton Data table Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing costs accept the special sales order because it will operating income. Total costs for 110,000 units 385,000 71,500 88,000 90,000 634,500 Print Done
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