EXAMPLE : 1

Flowers Inc. manufactures silk roses. Bud Company has approached Flowers with a proposal to buy 2,000 silk roses for $4.00 each. Regular customers are charged $4.25 for each rose. Flowers has the necessary capacity. The following costs are associated annually with silk roses with the company's normal production and sales of 10,000 roses:

Direct material	$21,000
Direct labor	13,000
Manufacturing overhead	9,000
Total	$43,000

Forty percent of the manufacturing overhead is variable. All fixed overhead is allocated equally to all products produced. In good form, prepare an incremental analysis to analyze whether Flowers should accept the order from Bud Company.