Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Shanghai Exports, LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2014 is as follows: statement for 2014 is as

Shanghai Exports, LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2014 is as follows:

statement for 2014 is as follows:

Shanghai Exports, LTD Budgeted Income Statement For the Year 2014
Sales ($ 44 per unit) $ 4,400,000
Cost of good sold ($ 32 per unit) (3,200,000)
Gross profit 1,200,000
Selling expenses ($ 3 per unit) (300,000)
Net income $ 900,000

Additional Information (1) Of the production costs and selling expenses, $800,000 and $100,000, respectively, are fixed. (2) Shanghai Exports, LTD received a special order from a hospital supply company offering to buy 12,500 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $32 to make a product to sell for $30." Calculate the net benefit (cost) of accepting the special order.

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

Auditing And EDP Objective Questions And Explanations

Authors: Irvin N Gleim, William A. Hillison

4th Edition

0917537432, 978-0917537431

More Books

Students also viewed these Accounting questions

Question

Do you think physicians should have unions? Why or why not?

Answered: 1 week ago