PA7-8 Analyzing Special-Order Decision [LO 7-2, 7-3]

Camino Company manufactures designer to-go coffee cups. Each line of coffee cups is endorsed by a high-profile celebrity and designed with special elements selected by the celebrity. During the most recent year, Camino Company had the following operating results while operating at 75 percent (90,000 units) of its capacity:

Sales revenue$1,260,000Cost of goods sold461,250Gross profit$798,750Operating expenses22,500Net operating income$776,250

Camino?s cost of goods sold and operating expenses are 80 percent variable and 20 percent fixed. Camino has received an offer from a professional wrestling association to design a coffee cup endorsed by its biggest star and produce 23,000 cups for $9 each (total $207,000). These cups would be sold at wrestling matches throughout the United States. Acceptance of the order would require a $46,000 endorsement fee to the wrestling star, but no other increases in fixed operating expenses.

Required:1.Complete the incremental analysis of the special order in the table provided below.

2.Should Camino accept this special order?NoYes3.If Camino were operating at full capacity, what price would Camino require for the special order?

value: 10.00 points PAIL-8 Analyzing Speciahrder Decision [L0 12, 1-3] Camino Company manufactures designer tc-go coffee cups. Each line of coffee cups is endorsed by a high prole celebrity and designed with special elements selected by the celebrity. During the most recent year. Camino Company had the following operating results while operating at T5 percent [90000 units] of its capacity: Sales reyenue $ 1.260000 Cost of goods sold 461,250 Gross prot $ T913350 Operating expenses 22,500 Net operating income $ \"6,250 Camino's cost of goods sold and operating expenses are 00 percent variable and 20 percent ned. Camino has received an offer from a professional wrestling association to design a coffee cup endorsed by its biggest star and produce 23,000 cups for $9 each (total $207,000}. These cups would be sold at wrestling matches throughout the United States. Acceptance of the order would require a $46,000 endorsement tee to the wrestling star, but no other increases in xed operating expenses. Required: 1. Complete the incremental analysis ofthe special order in the table provided below. mam 1it"'ariable COGS 1ll'ariable Operating Expenses mm..- 2. Should Caz-nine accept ihis special order'? ONO QYee 3. If Camine were operating at full capacity, what price would Camine require for the special order