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I have been calculating this question I determined there was an increase of 18,000 in operating income and not sure it is correct, please help
I have been calculating this question I determined there was an increase of 18,000 in operating income and not sure it is correct, please help me verify the answer
thank you!
D Lawrance designs and manufactures fashionable men's clothing For the coming year, the company has scheduled production of 40000 suede jackets. Budgeted costs for this product are as follows. Unit Costs (40,G80 Units) Total Variable manufacturing costs Variable selling expenies Fixed manufacturing costs Flxed operating expenses $2,806,009 800,068 4e0,680 28e,88e 20 1e Total costs and expenses s 55 33,489,808 The management of D. Lawrance is considering a special order from Discount Apparel for an additional 10,000 jackets. These jackets would carry the Discount Apparel label, rather than the D. Lawrance label. In all other respects, they would be identical to the regular D. Lawrance jackets. Although D. Lawrance regularly sells its jackets to retail stores at a price of $150 each, Discount Apparel has offered to pay only $80 per jacket. However, because no sales commissions would be involved with this special order, D. Lawrance will Incur varlable selling expenses of only $5 per unit on these sales, rather than the $20 it normally incurs. Accepting the order would cause no change in the company's fixed manufacturing costs or fixed operating costs. D. Lawrance has enough plant capacity to produce 55.000 jackets per year Required: a. Using incremental revenue and incremental costs, compute the expected effect of accepting this special order on operating income. Lawrance's crease 18,000Step by Step Solution
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