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K Barry Industries has an annual plant capacity of 68,000 units; current production is 58,000 units per year. At the current production volume, the
K Barry Industries has an annual plant capacity of 68,000 units; current production is 58,000 units per year. At the current production volume, the variable cost per unit is $27.00 and the fixed cost per unit is $3.80 The normal selling price of Barry's product is $50.00 per unit. Barry has been asked by Factory Company to fill a special order for 6,000 units of the product at a special sales price of $22.00 per unit. Factory is located in a foreign country where Barry does not currently operate. Factory will market the units in its country under its own brand name, so the special order is not expected to have any effect on Barry's regular sales Read the requirements LA 1/ TA ORI DU DE 2/ T MON Barry should not accept the special sales order because it will decrease operating income. Requirement 2. How would your analysis change if the special order sales price were to be $37.00 per unit and Barry would have to pay an attorney a fee of $12,000 to make sure it is complying with export laws and regulations relating to the 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 (6,000 units) SAN NOM 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 LUNDI 5/ PARTA
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