Question
Peach Juice Delights produces and sells 70,000 cases annually. The cost breakdown: COST ITEM COSTS PER CASE TOTAL COSTS Variable production costs $20 $1,400,000 Fixed
Peach Juice Delights produces and sells 70,000 cases annually. The cost breakdown:
COST ITEM | COSTS PER CASE | TOTAL COSTS |
Variable production costs | $20 | $1,400,000 |
Fixed production costs | 8 | 560,000 |
Variable selling costs | 6 | 420,000 |
Fixed selling and admin costs | 4 | 280,000 |
Total costs | $38 | $2,660,000 |
Peach Juice Delights marks up prices 30% over full costs. It has the capacity to produce 20,000 more cases. A French distributor has offered to purchase 15,000 cases at $50 per case. Additional shipping and selling costs are $4 per case. Prepare the income statement showing the impact of accepting this order.
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