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Ferrish Industries has an annual plant capacity of 70,000 units; current production is 52,000 units per year. At the current production volume, the variable cost
Ferrish Industries has an annual plant capacity of 70,000 units; current production is 52,000 units per year. At the current production volume, the variable cost per unit is $28.00 and the fixed cost per unit is $4.40. The normal selling price of Ferrish's product is $49.00 per unit. Ferrish has been asked by Galvano Company to fill a special order for 14,000 units of the product at a special sales price of $23.00 per unit. Galvano is located in a foreign country where Ferrish does not currently operate. Galvano 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. Read the requirements. Requirement 1. How would accepting the special order impact Ferrish's operating income? Should Ferrish accept the special order? Ferrish's operating income by $ Thus, Ferrish The special order will accept the special sales order. Requirement 2. How would your analysis change if the special order sales price were to be $35.00 per unit and Ferrish would have to pay an attorney a fee of $18,000 to make sure it is complying with export laws and regulations relating to the special order? Ferrish's operating income by $ Thus, Ferrish Under these new assumptions, the special order will accept the special sales order
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