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Q2: Leno Company manufactures toasters. For the first 8 months of 2014, the company reported the following operating results while operating at 75% of plant
Q2: Leno Company manufactures toasters. For the first 8 months of 2014, the company reported the following operating results while operating at 75% of plant capacity Sales (350,000 units) $4,375,000 Cost of goods sold 2,600,000 Gross profit 1,775,000 Operating expenses 840,000 Net income 935,000 Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed. In September, Leno Company receives a special order for 15,000 toasters at $7.60 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed operating expenses. Instructions: A. Prepare an incremental analysis for the special order. Reject Order Accept Order Net Income Increase (Decrease) (1) Revenues (2) Cost of goods sold (3) Operating Expenses Net Income Show your calculations for), ), and if the company accepted the order in the table below (1) Revenues (2) Cost of goods sold (3) Operating Expenses B. Should Leno Company accept the special order? Why or why not
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