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Ferrish Industries has an annual plant capacity of 6 7 , 0 0 0 units; current production is 5 4 , 0 0 0 units
Ferrish Industries has an annual plant capacity of units; current production is units per year. At the current production volume, the variable cost per unit is $ and the fixed cost per unit is $ The normal selling price of Ferrish's product is $ per unit. Ferrish has been asked by Cornhill Company to fill a special order for units of the product at a special sales price of $ per unit. Cornhill is located in a foreign country where Ferrish does not currently operate. Cornhill will market the units in its country under its own brand name, so the special order is not expected to have any effect on Ferrish's regular sales.
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Complete the following incremental analysis to determine the impact on Ferrish's operating income if it accepts this special order. Enter a for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin andor operating income from the special order.
Incremental Analysis of Special Sales Order Decision
Total Order
units
Revenue from special order
Less expenses associated with the order:
Less: Variable manufacturing cost
Contribution margin
Less: Additional fixed expensestissociated with the order
Increase decrease in operating income from the special order
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