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Problem 4-Incremental Analysis-Special Order: (40 points) Sunlight Company manufacturers Toasters. For the first 10 months of the year, the company reported the following results while
Problem 4-Incremental Analysis-Special Order: (40 points) Sunlight Company manufacturers Toasters. For the first 10 months of the year, the company reported the following results while running at 80% of capacity: Sales (350,000 units) Cost of Goods Sold Gross Profit Operating Expenses Net Income 4,375,000 2,600,000 1,775,000 840,000 935,000 Cost of goods sold were 60% variable and 40% fixed; operating expenses were 70% variable and 30% fixed. In November, Sunlight received a special order for 10,000 toasters at $7.00 each from Glare Global Appliance. Acceptance will required additional shipping cost of $2,000 but no increase in fixed cost. Required: a. Prepare an incremental analysis for the special order. b. Should the company accept the special order? Why? Special Order Reject Cost of Goods Sold Operating Expenses Net Income
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