Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Swifty Company is a leading manufacturer of sunglasses. One of Swifty's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted

Swifty Company is a leading manufacturer of sunglasses. One of Swifty's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Swifty about purchasing 29,800 pairs of these sunglasses. Swifty's unit manufacturing cost, based on a full capacity of 253,000 units, is as follows:

Direct materials $6

Direct labor $4

Manufacturing overhead (75% fixed) $20

Total manufacturing costs $30

Swifty also incurs selling and administrative expenses of $75,300 plus $2 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Swifty's normal price for these sunglasses is $40 per pair. The sporting goods store has offered to pay $34 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid.

What would be the effect on Swifty's income if the special order were accepted?

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

Step: 3

blur-text-image

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

Modern Management Concepts And Skills

Authors: Samuel Certo, S Certo

15th global Edition

978-1292265193, 1292265191

More Books

Students also viewed these Accounting questions

Question

Speak clearly and distinctly with moderate energy

Answered: 1 week ago

Question

Get married, do not wait for me

Answered: 1 week ago

Question

Do not pay him, wait until I come

Answered: 1 week ago