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Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted Income statement for April, when she
Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted Income statement for April, when she expects to produce and sell 3700 meals: sales revenue costs of meals produced Gross profit Administrative costs Operating profit Amount $ 24,790 17,945 $ 6,945 2,960 $ 3,885 Per Unit $6.70 4.85 $1.85 0.80 $1.05 Fixed costs included in this income statement are $5,809 for meal production and $740 for administrative costs. Marta has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.85 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected Required: o. What impact would accepting this special order have on operating profit? (Select option "higher" or "lower", keeping Status Quo as the base Select "none" if there is no effect.) Answer is complete and correct. Status Quo 3,700 Units S 24,790 Altomativa 4,000 Units Difference 25.945 IS 1.155 higher o 984 Higher Sales revenue Variable costs Meals Administrative Contribution margin Fixed costs Operating profit none 12,136 2220 10.434S 6.549 3.885 IS 13,120 2220 10,0055 6,549 4056 171 19 higher none higher OOO 171 b. From an operating profit perspective for April, should Marta accept the order? Yes No
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