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: Shanghai Exports, LTD Budgeted

image text in transcribed

Shanghai Exports, LTD produces wall mounts for flat panel television sets. The forecasted income 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 sald ($32 per unit) (3,200,000) | Gross profit Selling expenses ($3 per unit! Net income 1,700,000 1300,000) $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 fixed 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 husiness of paying $32 to make a product to sell for $30," Do you think the company should accept the special order? Compute the contribution per unit and total contribution for the special order. Contribution per unit. Note: Round answer to two decimal places. $6.25 Total contribution $ 75,000

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_2

Step: 3

blur-text-image_3

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

Intermediate Accounting

Authors: Kin Lo, George Fisher

Volume 1, 1st Edition

132612119, 978-0132612111

More Books

Students also viewed these Accounting questions