statement for the month ended March 31, 2019 is presented below; Big City Seat Cushions Inc. Income Statement For the Month Ended March 31, 2019 Sales in Units 4,200 Sales Revenue S 58.800 Variable Costs: Manufacturing 25,200 $25,200 Selling and Administrative 11,000 4,200 units = Total Variable Costs 36,200 $6 per unit Contribution Margin 22,600 var. man. cost Fixed Costs: Manufacturing 12,500 Selling and Administrative 8.700 Total Fixed Costs 21,200 Operating Income S 1,400 Big City gets a phone call from Worldwide Outdoor Furniture. They are interested in buying 480 cushions from Big City. Acceptance of the order will not increase Big City's variable selling and administrative costs. Big City has enough unused plant capacity to manufacture the additional cushions (so no increase in fixed costs). Worldwide has offered $7 per cushion, which is below the normal sales of $14 per cushion. Differential Analysis $ 3,360 Expected Increase in fixed cost 0 Expected Increase or (decrease) in operating income $ 6. Conclusion: Homework 2 - Sell or Process Further Blue Bird Ice Cream processes milk into ice cream to sell to retirement homes in one-gallon containers. Each batch, processed at a cost of $600, yields 800 gallons of plain ice cream. Blue Bird sells the one-gallon tubs for $10 each, and spends $0.25 for each tub container. The company is considering a different strategy as there is demand for individual size portions with crunchy nuts added. Blue Bird can further process each batch into 15,000 individual portions that would sell for $0.90. The packaging for the smaller portion would cost $0.10 per carton and the crunchy nuts would cost $.15 (15 cents) per portion. Fixed cost would not change. Differential Analysis - Sell or Process Further Sell Process Difference 800 Further tubs Expected Revenue from selling by the gallon S X $ 5,500 $.2. Expected Revenue from selling individual portions 200 each Additional cost of selling as is in gallon tubs S Additional cost of processing into individual portions S S Total Net Revenue $ 7. $ 9,750 $ 8. Based on your analysis, which is more profitable.......sell by the gallon or sell individual portions