q 12 Calla Company produces skateboards that sell for $55 per unit The company currently has the capacity to produce 90,000 skateboards per year, but is selling 81,600 skateboards per year Annual costs for 81,600 skateboards follow Direct materials $ 864,960 Direct labor 742,560 Overhead 943,000 Selling expenses 560,000 Administrative expenses 474,000 Total costs and expenses $ 3,584,520 A new retail store has offered to buy 8,400 of its skateboards for $50 per unit The store is in a different market from Calla's regular customers and would not affect regular sales A study of its costs in anticipation of this additional business reveals the following Direct materials and direct labor are 100 variable 40 percent of overhead is fixed at any production level from 81,600 units to 90,000 units the remaining 60 of annual overhead costs are variable with respect to volume Selling expenses are 80 variable with respect to number of units sold, and the other 20 of selling expenses are fixed There will be an additional $2 60 per unit selling expense for this order Administrative expenses would increase by a $840 fixed amount Required 1 Prepare a three column comparative income statement that reports the following a Annual income without the special order b Annual income from the special order c Combined annual income from normal business and the new business 2 Should Calla accept this order Complete this question by entering your answers in the tabs below Required 1 Required 2 Prepare a three column comparative income statement that reports the following a Annual income without the special order b Annual income from the special order c Combined annual income from normal business and the new business (Do not round your intermediate calculations Round your cost and expenses to nearest whole number ) Show less A CALLA COMPANY COMPARATIVE INCOME STATEMENTS Additional Combined Total Normal Volume Volume Costs and expenses Total costs and expenses 0 0 0 Operating income Required 1 Required 2 12 of 12 Next Prev

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q 12 Calla Company produces skateboards that sell for $55 per unit. The company currently has the capacity to produce 90,000 skateboards per year, but

q 12

Calla Company produces skateboards that sell for $55 per unit. The company currently has the capacity to produce 90,000 skateboards per year, but is selling 81,600 skateboards per year. Annual costs for 81,600 skateboards follow.


Direct materials	$	864,960
Direct labor		742,560
Overhead		943,000
Selling expenses		560,000
Administrative expenses		474,000
Total costs and expenses	$	3,584,520

A new retail store has offered to buy 8,400 of its skateboards for $50 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following:

Direct materials and direct labor are 100% variable.
40 percent of overhead is fixed at any production level from 81,600 units to 90,000 units; the remaining 60% of annual overhead costs are variable with respect to volume.
Selling expenses are 80% variable with respect to number of units sold, and the other 20% of selling expenses are fixed.
There will be an additional $2.60 per unit selling expense for this order.
Administrative expenses would increase by a $840 fixed amount.

Required: 1. Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order. b. Annual income from the special order. c. Combined annual income from normal business and the new business. 2. Should Calla accept this order? image text in transcribed

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a three-column comparative income statement that reports the following: a. Annual income without the special order b. Annual income from the special order. c. Combined annual income from normal business and the new business. (Do not round your intermediate calculations. Round your cost and expenses to nearest whole number.) Show less A CALLA COMPANY COMPARATIVE INCOME STATEMENTS Additional Combined Total Normal Volume Volume Costs and expenses: Total costs and expenses 0 0 0 Operating income Required 1 Required 2 12 of 12 Next Prev