Answered step by step
Verified Expert Solution
Question
1 Approved Answer
PCGelco Manufacturing produces and sells oil filters for $ 3 . 3 5 each. A retailer has offered to purchase 1 0 , 0 0
PCGelco Manufacturing produces and sells oil filters for $ each. A retailer has offered to purchase oil filters for $ per filter. Of the total manufacturing cost per filter of $ $ is the variable manufacturing cost per filter. For this special order, PCGelco would have to buy a special stamping machine that costs $ to mark the customer's logo on the specialorder oil filters. The machine would be scrapped when the special order is complete. This special order would use manufacturing capacity that would otherwise be idle. No variable nonmanufacturing costs would be incurred by the special order. Regular sales would not be affected by the special order. Would you recommend that PCGelco accept the special order under these conditions? Complete the following incremental analysis to help you make your recommendation. Use parentheses or a minus sign to indicate a decrease in operating income from the special order. tableIncremental Analysis of Special Sales Order Decision,Per UnitRevenue from special order,Total Order Less variable expense associated with the order: Contribution margin Increase decrease in operating income from the special order
PCGelco Manufacturing produces and sells oil filters for $ each. A retailer has offered to purchase oil filters for $ per filter. Of the total manufacturing cost per filter of $ $ is the variable manufacturing cost per filter. For this special order, PCGelco would have to buy a special stamping machine that costs $ to mark the customer's logo on the specialorder oil filters. The machine would be scrapped when the special order is complete. This special order would use manufacturing capacity that would otherwise be idle. No variable nonmanufacturing costs would be incurred by the special order. Regular sales would not be affected by the special order.
Would you recommend that PCGelco accept the special order under these conditions?
Complete the following incremental analysis to help you make your recommendation. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.
tableIncremental Analysis of Special Sales Order Decision,Per UnitRevenue from special order,Total Order
Less variable expense associated with the order:
Contribution margin
Increase decrease in operating income from the special order
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started