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More info Data table Total costs for 80,000 units The company's relevant range extends to 93,000 units. Luxury has received a special order for
More info Data table Total costs for 80,000 units The company's relevant range extends to 93,000 units. Luxury has received a special order for 8,000 t-shirts at a special price of $56,000 for the entire order. The special order t-shirt would use a fabric that is less expensive than the standard fabric used by Luxury, which would allow Luxury to save $0.80 per t-shirt in direct materials when manufacturing this special order. Luxury has the excess capacity to manufacture this special order. Its total fixed costs will not be impacted by the special order. Direct materials Direct labor Variable manufacturing overhead 264,000 40,000 80,000 160,000 Fixed manufacturing overhead $ 544,000 Total manufacturing costs Print Done Print Done - Luxury Products manufactures t-shirts. It has the following costs when its production level is 80,000 units (t-shirts): (Click the icon to view the costs.) i (Click the icon to view additional information.) What will happen to Luxury's operating income if it accepts this special order? Complete the following incremental analysis to determine the impact on Luxury's operating income if it accepts this special order. (Round all per unit amounts to the nearest cent, $X.XX, and all other amounts to the nearest whole dollar. Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order.) Total Order Incremental Analysis of Special Sales Order Decision Per Unit (8,000 units) Revenue from special order Less variable expense associated with the order: Direct materials Direct labor Variable manufacturing overhead Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order
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