Industries has an annual plant capacity of

66,000

units; current production is

57,000

units per year. At the current production volume, the variable cost per unit is

$32.00

and the fixed cost per unit is

$4.50.

The normal selling price of

Luxe's

product is

$44.00

per unit.

Luxe

has been asked by

Bramwall

Company to fill a special order for

5,000

units of the product at a special sales price of

$28.00

per unit.

Bramwall

is located in a foreign country where

Luxe

does not currently operate.

Bramwall

will market the units in its country under its own brand name, so the special order is not expected to have any effect on

Luxe's

regular sales. Read the requirements

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Question content area bottom

Part 1

Requirement 1. How would accepting the special order impact

Luxe's

operating income? Should

Luxe

accept the special order?Complete the following incremental analysis to determine the impact on

Luxe's

operating income if it accepts this special order. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order.)

Incremental Analysis of Special Sales Order Decision	Total Order (5,000 units)
Revenue from special order
Less expenses associated with the order:
Less: Variable manufacturing cost
Contribution margin
Less: Additional fixed expenses associated with the order
Increase (decrease) in operating income from the special order