Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Seved Help Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted income statement for April,

image text in transcribed
image text in transcribed
Seved Help Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted income statement for April, when she expects to produce and sell 2,800 meals: Amount Per Unit Sales revenue $16,240 $5.80 Costs of meals produced 12,320 4.40 Gross profit $ 3,920 $1.40 Administrative costs 2,240 0.80 Operating profit $ 1,680 $0.60 Fixed costs included in this income statement are $4144 for meal production and $560 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is wiing to pay $3.40 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected Required: a. What impact would accepting this special order have on operating profit? (Select option "higher" or "lower", keeping Status Quo as the base. Select "none" if there is no effect.) Difference Status Quo Alternative 2,800 Units 3,100 Units $ 16,240 $ 17.260 $ 1,020 higher 876 higher none Sales revenue Variable costs: Meals Administrative Contribution margin Fixed costs Operating profit $ 8,176 1,680 6,384 $ 4,704 1.680 $ 9,052 1.680 6,578 $ 4,704 1,824 $ 144 higher none 144 higher $ 1.680 $ $ $ none 144 higher Contribution margin Fixed costs Operating profit 6,384 4.704 1,680 6,578 $ 4.704 1,824 $ none $ $ 144 higher b. From an operating profit perspective for April, should Maria accept the order? Yes No

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Paul E. Dascher, Jerry R. Strawser, Robert H. Strawser, Ronald M. Copeland

8th Edition

0873937643, 978-0873937641

More Books

Students also viewed these Accounting questions

Question

4. In Exercise 3, are the random variables X and Y independent?

Answered: 1 week ago