Luxe Industries has an annual plant capacity of 73,000 units; current production is 59.000 units per year. At the current production volume, the variable cost
Luxe Industries has an annual plant capacity of 73,000 units; current production is 59.000 units per year. At the current production volume, the variable cost per unit is $31.00 and the xed cost per unit is $4.70. The normal selling price of Luxe's product is $50.00 per unit. Luxe has been asked by Caldwell Company to ll a special order for 12.000 units of the product at a special sales price of $29.00 per unit. Caldwell is located in a foreign country where Luxe does not currently operate. Caldwell 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 muirements. 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 andror operating income Tom the special order.) Total Order Incremental Analysis of Special Sales Order Decision (12,000 units] Requirements Revenue from special order Less expenses associated with the order: 1. How would accepting the special order impact Luxe's operating income? Less: Variable manufacturing cost Should Luxe accept the special order? Contribution margin 2. How would your analysis change if the special order sales price were to be $43.00 per unit and Luxe would have to pay an attorney a fee of $13,000 to Less: Additional xed expenses associated with the order make sure it is com plying with export laws and regulations relating to the special order? Increase {decrease} in operating income from the special order
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