Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,053,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment $1.96 Direct materials 0.47 Total $2,063,880 494,910 1,031.940 1.484.730 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses 0.98 1.41 0.38 400.140 Total $5.20 $5.475.600 The US Army his approached Klean Fiber and expressed an interestin purchasing 249.700 V Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor and variable manufacturing overheag costs. In addition, the Army has agreed to pay an additional $10 per ondergarment to cover all other costs and provide a pront Presently Kean Fiber is operating at 70% capacity and does not have any other potential buyers for Y Goff Klean Fiber access the Army sotter it will not incur any variable selling expenses related to this order Presten incrementanalysis for the Klean Fiber (Enter negative amounts usins either a negative sin preceding the number 3.-45 or parentheseses (450 Reject Order Accept Order Net Income Increase (Decrease) Revenues $ S $ Variable costs: Direct materials Direct labor Variable overhead Total variable costs Net Income S Should Klean Fiber accept the Army s offer? Klean Fiber should the Army's offer Klean Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,053,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment $1.96 Direct materials 0.47 Total $2,063,880 494,910 1,031.940 1.484.730 Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses 0.98 1.41 0.38 400.140 Total $5.20 $5.475.600 The US Army his approached Klean Fiber and expressed an interestin purchasing 249.700 V Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor and variable manufacturing overheag costs. In addition, the Army has agreed to pay an additional $10 per ondergarment to cover all other costs and provide a pront Presently Kean Fiber is operating at 70% capacity and does not have any other potential buyers for Y Goff Klean Fiber access the Army sotter it will not incur any variable selling expenses related to this order Presten incrementanalysis for the Klean Fiber (Enter negative amounts usins either a negative sin preceding the number 3.-45 or parentheseses (450 Reject Order Accept Order Net Income Increase (Decrease) Revenues $ S $ Variable costs: Direct materials Direct labor Variable overhead Total variable costs Net Income S Should Klean Fiber accept the Army s offer? Klean Fiber should the Army's offer
