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Mcman Company supplies schools with floor mattresses to use in physical education classes. Mcman has received a special order from a large school district to
Mcman Company supplies schools with floor mattresses to use in physical education classes. Mcman has received a special order from a large school district to buy 500 mats at $40 each. Acceptance of the special order will not affect fixed costs but will result in $800 of shipping costs. For the first 6 months of 2020, the company reported the following operating results while operating at 80% capacity: Sales (25,000 units) $1,250,000 Cost of goods sold 980,000 Gross profit 270,000 Operating expenses 170,000 Net income $ 100,000 Cost of goods sold was 80% variable and 20% fixed; operating expenses were 70% variable and 30% fixed. Instructions a) Prepare an incremental analysis for the special order. b) Should Mcman Company accept the special order? Justify your
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