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Requirement 5. Dean, Inc. has just asked KM Clark to supply the company with 350,000 cans of tennis balls at a special order price
Requirement 5. Dean, Inc. has just asked KM Clark to supply the company with 350,000 cans of tennis balls at a special order price of $0.80 per can. Dean wants KM Clark to package the tennis balls under the Dean label (KM Clark will imprint the Dean logo on each tennis ball and can). KM Clark will have to spend $25,000 to change the packaging machinery. Assuming the original volume and costs, should KM Clark accept this special order? (Assume KM Clark will incur variable selling costs as well as variable manufacturing costs related to this order.) First, calculate the income or loss on the special order. (Use parentheses or a minus sign for a loss.) Revenue from special order Less: Variable costs of special order Contribution margin from special order Less: Additional fixed costs of special order Operating income or loss provided by special order
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