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Marigold Company is a leading manufacturer of sunglasses. One of Marigold's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted
Marigold Company is a leading manufacturer of sunglasses. One of Marigold's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Marigold about purchasing 18,200 pairs of these sunglasses. Marigold's unit manufacturing cost, based on a full capacity of 103,000 units, is as follows: Direct materials Direct labor Manufacturing overhead (60% fixed) 20 Total manufacturing costs Marigold also incurs selling and administrative expenses of $78,930 plus $2 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Marigold's normal price for these sunglasses is $42 per pair. The sporting goods store has offered to pay $37 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid. What would be the effect on Marigold's income if the special order were accepted? Marigold's income will increase ) , 265375. Click if you would like to Show Work for this question: Open Show Work
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