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K Sampson Industries has an annual plant capacity of 71,000 units; current production is 50,000 units per year. At the current production volume, the variable
K Sampson Industries has an annual plant capacity of 71,000 units; current production is 50,000 units per year. At the current production volume, the variable cost per unit is $26.00 and the fixed cost per unit is $3.90. The normal selling price of Sampson's product is $44.00 per unit. Sampson has been asked by Factory Company to fill a special order for 16,000 units of the product at a special sales price of $20.00 per unit. Factory is located in a foreign country where Sampson 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 Sampson's regular sales. Read the requirements. Requirement 1. How would accepting the special order impact Sampson's operating income? Should Sampson accept the special order? Complete the following incremental analysis to determine the impact on Sampson'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 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 Get mor Requirements .. 1. How would accepting the special order impact Sampson's operating income? Should Sampson accept the special order? Print Total Order (16,000 units) Done 2. How would your analysis change if the special order sales price were to be $37.00 per unit and Sampson would have to pay an attorney a fee of $16,000 to make sure it is complying with export laws and regulations relating to the special order? - X Clear all Check answer
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