Question
Sheridan Industries manufactures and bottles energy drinks. Last year, the company made and bottled 2518000 units. Sheridan has the capacity to manufacture and bottle 3018000
Sheridan Industries manufactures and bottles energy drinks. Last year, the company made and bottled 2518000 units. Sheridan has the capacity to manufacture and bottle 3018000 units per year. Sheridan has received a special offer from a grocery chain for 518000 bottles with a special label to be sold as the house brand energy drink. Sheridan's normal selling price is $0.80 per bottle. The special offer is for $372960 total ($0.72// bottle). Management estimates that the variable cost per bottle is $0.34; fixed manufacturing overhead is $0.22// bottle. Of the fixed costs assigned to this special order, $2500 is for the special labels, the remainder is attributable to costs that will be incurred regardless of whether the special order is produced.
Sheridan Industries manufactures and bottles energy drinks. Last year, the company made and bottled 2518000 units. Sheridan has the capacity to manufacture and bottle 3018000 units per year. Sheridan has received a special offer from a grocery chain for 518000 bottles with a special label to be sold as the house brand energy drink. Sheridan's normal selling price is $0.80 per bottle. The special offer is for $372960 total ( $0.72/ bottle). Management estimates that the variable cost per bottle is $0.34; fixed manufacturing overhead is $0.22/ bottle. Of the fixed costs assigned to this special order, $2500 is for the special labels, the remainder is attributable to costs that will be incurred regardless of whether the special order is produced. What is the operating income generated by the special order? $82880 $80380 $194340 $196840
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