Simple

Products manufactures t-shirts. It has the following costs when its production level is

90,000

units (t-shirts):

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(Click the icon to view additional information.)What will happen to

Simple's

operating income if it accepts this special order?Complete the following incremental analysis to determine the impact on

Simple's

operating income if it accepts this special order. (Round all per unit amounts to the nearest cent, $X.XX, and all other amounts to the nearest whole dollar. Enter a"0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order.)

		Total Order
Incremental Analysis of Special Sales Order Decision	Per Unit	(9,000 units)
Revenue from special order
Less variable expense associated with the order:
Direct materials
Direct labor
Variable manufacturing overhead
Contribution margin
Less: Additional fixed expenses associated with the order
Increase (decrease) in operating income from the special order

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Data Table

	Total costs for 90,000 units
Direct materials	$315,000
Direct labor	45,000
Variable manufacturing overhead	63,000
Fixed manufacturing overhead	150,000
Total manufacturing costs	$573,000

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More Info

The company's relevant range extends to

104,000

units.

Simple

has received a special order for

9,000

t-shirts at a special price of

$56,250

for the entire order. The special order t-shirt would use a fabric that is less expensive than the standard fabric used by

Simple,

which would allow

Simple

to save

$0.30

per t-shirt in direct materials when manufacturing this special order.

Simple

has the excess capacity to manufacture this special order. Its total fixed costs will not be impacted by the special order.