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Incremental Analysis (10 points) Bandon Company sells high-end sportswear shirts and reported the following operating results while producing 120,000 units: Amount Of the total manufacturing
Incremental Analysis (10 points) Bandon Company sells high-end sportswear shirts and reported the following operating results while producing 120,000 units: Amount Of the total manufacturing overhead Sales $4,200,000 costs above, $960,000 are fixed costs. of the total selling and admin expense Direct Materials 1,020,000 above, $225,000 are fixed costs. In Direct Labor 1,320,000 July, normally a slow production Manufacturing Overhead 1,200,000 month, Bandon Company receives a Selling & Admin Expenses 435.000 special order for 10,000 t-shirts at $29 $225,000 Net Income each from the local sports club. Answer the following and Show Your Work: Paragraph B IEEE on 1) What information is relevant to this decision? Indicate Yes or No. (2 pts) Relevant Y/N Sales Direct Labor Direct Materials Variable Selling & Admin Fixed Manufacturing Overhead Variable Manufacturing Overhead Fixed Selling & Admin 2) What is the amount of Selling and Admin expense that would be incurred for the special order? (2 pts) 1 3) Prepare an incremental analysis table for whether or not to accept or reject the special order: (5 pts) Effect on Net Income Accept Reject Description 3) Prepare an incremental analysis table for whether or not to accept or reject the special order: (5 pts) Description Reject Accept Effect on Net Income 4) Should Bandon Company accept the special order? (1 pt) 1
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