Exercise 7-3

Bramble Company manufactures toasters. For the first 8 months of 2017, the company reported the following operating results while operating at 75% of plant capacity:

Sales (349,100 units)		$4,377,000
Cost of goods sold		2,594,000
Gross profit		1,783,000
Operating expenses		839,400
Net income		$943,600

Cost of goods sold was 67% variable and 33% fixed; operating expenses were 77% variable and 23% fixed. In September, Bramble receives a special order for 24,500 toasters at $8.38 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $2,900 of shipping costs but no increase in fixed costs.