Homework 1 - Special Pricing Big City Seat Cushions Inc. makes seat cushions for outdoor furniture. Big City's contribution margin income statement for the month ended March 31, 2019 is presented below: Big City Seat Cushions Inc. Income Statement For the Month Ended March 31, 2019 Sales in Units 4,200 Sales Revenue $ 58,800 Variable Costs: Manufacturing 25,200 $25,2007 Selling and Administrative 11,000 4,200 units = Total Variable Costs 36,200 $6 per unit var. man. cost Contribution Margin 22,600 Fixed Costs: Manufacturing 12,500 Selling and Administrative 8,700 Total Fixed Costs 21,200 Operating Income $ 1,400 Big City gets a phone call from Worldwide Outdoor Furniture. They are interested in buying 480 cushions from Big City. Acceptance of the order will not increase Big City's variable selling and administrative costs. Big City has enough unused plant capacity to manufacture the additional cushions (so no increase in fixed costs). Worldwide has offered $7 per cushion, which is below the normal sales of $14 per cushion. Differential Analysis $ 3,360 Expected Increase in fixed cost Expected Increase or decrease) in operating income Conclusion