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Schumann Company supplies schools with floor mattresses to use in physical education classes. Schumann has received a special order from a large school district to
Schumann Company supplies schools with floor mattresses to use in physical education classes. Schumann has received a special order from a large school district to buy 400 mats at $45 each. Acceptance of the special order will not affect fixed costs but will result in $1,200 of shipping costs. For the first 6 months of 20X2, the company reported the following operating results while operating at 70% capacity SCHUMANN COMPANY OPERATING RESULTS AT 70% CAPACITY FOR FIRST SIX MONTHS OF 20X2 Sales (100,000 units) Cost of Goods Sold Gross Profit Operating Expenses Operating Income 7,000,000 4,200,000 2,800,000 2,000,000 800,000 Cost of goods sold was 80% variable and 20% fixed. Operating expenses were 75% variable and 25% fixed. REQUIRED: (1) Prepare an incremental analysis for the special order. Show appropriate supporting calculations. Should Schumann Company accept the special order? Justify your answer. (2)
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