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Marla's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted Income statement for Aprll, when she
Marla's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted Income statement for Aprll, when she expects to produce and sell 3,400 meals: Fixed costs included in this Income statement are $5,236 for meal production and $680 for administrative costs. Marla has recelved a speclal request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.70 per meal for 300 meals on Aprll 10. Marla has sufficlent Idle capacity to fill this speclal order. These meals will Incur all of the varlable costs of meals produced, but varlable administrative costs and total fixed costs will not be affected. Required: a. What Impact would accepting this special order have on operating profit? (Select optlon "higher" or "lower", keeping Status Quo as the base. Select "none" If there is no effect.) b. From an operating profit perspectlve for Aprll, should Marla accept the order? Yes No
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