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Ecosolutions income statement is presented below: Contribution Margin Income Statement Per Unit Total Sales $30 $24,000,000 Variable Costs Direct Materials 4 3,200,000 Direct Labor 5
Ecosolutions income statement is presented below:
Contribution Margin Income Statement | |||
Per | |||
Unit | Total | ||
Sales | $30 | $24,000,000 | |
Variable Costs | |||
Direct Materials | 4 | 3,200,000 | |
Direct Labor | 5 | 4,000,000 | |
Variable Selling Exp. | 3 | 2,400,000 | |
Variable Overhead | 4 | 3,200,000 | |
Total Variable Costs | $16 | $12,800,000 | |
Contribution Margin | $14 | $11,200,000 | |
Fixed Costs | |||
Selling Costs | 1,500,000 | ||
Administrative Costs | 2,000,000 | ||
Total Fixed Costs | $3,500,000 | ||
Before Tax Income | $7,700,000 |
A special order to purchase 10,000 units @ 21.50 from a good customer is received. The company has the capacity to fulfill the order. If the order is accepted variable selling expenses will be $.50 per unit (there will be no commissions in the order), but a fixed administrative cost of $2,000 will be added to the new order. If the order is accepted what will be the incremental before tax income.
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