Question
Relax Products manufactures t-shirts. It has the following costs when its production level is 105,000 units (t-shirts): What will happen to Relax's operating income if
Relax Products manufactures t-shirts. It has the following costs when its production level is 105,000 units (t-shirts):
What will happen to Relax's operating income if it accepts this special order?
Complete the following incremental analysis to determine the impact on Relax's operating income if it accepts this special order. (Round all per unit amounts to the nearest cent, $X.XX, and all other amounts to the nearest whole dollar. Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order.)
More Info The company's relevant range extends to 120,500 units. Relax has received a special order for 10,500 t-shirts at a special price of $49,875 for the entire order The special order t-shirt would use a fabric that is less expensive than the standard fabric used by Relax, which would allow Relax to save $0.65 per t-shirt in direct materials when manufacturing this special order. Relax has the excess capacity to manufacture this special order. Its total fixed costs will not be impacted by the special order Print Done V operating income. Relax V accept the special sales order because it willStep by Step Solution
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