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Please do all the requirements clearly, with clear handwritten. The Crestone Company provides landscaping services to corporations and businesses. All its landscaping work requires Crestone
Please do all the requirements clearly, with clear handwritten.
The Crestone Company provides landscaping services to corporations and businesses. All its landscaping work requires Crestone to use landscaping equipment. Its landscaping equipment has the capacity to do 11,000 hours of landscaping work. It currently anticipates getting orders that would utilize 10,000 hours of equipment time from existing customers. Crestone charges $110 per hour for landscaping work. Cost information for the current expected activity level is as follows: (Click the icon to view the cost information.) Read the requirement. $ 1,100,000 750,000 Revenues ($110 x 10,000 hours) Variable landscaping costs (including materials and labor), which vary with the number of hours worked ($75 per hour x 10,000 hours) Fixed landscaping costs Variable marketing costs (4% of revenues) 96,000 44,000 74,000 Fixed marketing costs 964,000 Total costs $ 136,000 Operating income - Requirement Crestone has received an order for landscaping work from Janice Corporation at $66 per hour that would require 2,700 hours of equipment time. Variable landscaping costs for the Janice Corporation order are $75 per hour and variable marketing costs are 4% of revenues. Crestone can either accept the Janice offer in whole or reject it. Should Crestone accept the offer? Begin by completing an analysis, and start by showing the computation of the company's operating income without the special order. Next, calculate operating income with the special order, and then determine whether Crestone should accept or reject the special order. Without One-Time Only Special Order Relevant revenues Relevant variable costs: Landscaping costs Marketing costs MAI Total relevant costs Relevant operating incomeStep by Step Solution
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