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Sheffield Company manufactures outdoor fireplaces. For the first 9 months of 2 0 2 0 , the company reported the following operating results while operating
Sheffield Company manufactures outdoor fireplaces. For the first months of the company reported the following operating results while operating at of plant capacity:
Sales units
$
Cost of goods sold
Gross profit
Operating expenses
Net income
$
Cost of goods sold was variable and fixed; operating expenses were variable and fixed.
In October, Sheffield Company receives a special order for fireplaces at $ each from Langston's Landscape Company.
Acceptance of the order would result in an additional $ of shipping costs but no increase in fixed operating expenses.
Before Sheffield could give Langston's Landscape Company an answer, the company received a special order from Benson Building & Supply for fireplaces. Benson is willing to pay $ per fireplace but it wants a special design imbedded into the fireplace that increases cost of goods sold by $ The special design also requires the purchase of a part that costs $ and will have no future use for Sheffield Company. Benson Building & Supply will pick up the fireplaces so no shipping costs are involved. Due to capacity limitations Sheffield cannot accept both special orders. Which order should be accepted? Document your decision by preparing an incremental analysis for Benson's order.
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