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Sylvan Juda Sunglasses sell for about $153 per pair. Suppose the company incurs the following average costs per pair: (Click the icon to view the
Sylvan Juda Sunglasses sell for about $153 per pair. Suppose the company incurs the following average costs per pair: (Click the icon to view the cost information.) Sylvan Juda has enough idle capacity to accept a one-time-only special order from Colorado Glasses for 19,000 pairs of sunglasses at $83 per pair. Sylvan Juda will not incur any variable marketing expenses for the order. Read the requirements. Requirement 1. How would accepting the order affect Sylvan Juda's operating income? In addition to the special order's effect on profits, what other (longer-term qualitative) factors should Sylvan Juda's managers consider in deciding whether to accept the order? Prepare an incremental analysis to determine the special order's effect on operating income. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in operating income from the special order.) Total Order Incremental Analysis of Special Sales Order Decision Per Unit (19,000 units) Revenue from special order Less variable expense associated with the order: Variable manufacturing costs Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Data table Direct materials Direct labor..... Variable manufacturing overhead Variable marketing expenses Fixed manufacturing overhead. Total cost.... $ 41 11 10 4 25* EA $ 91 * $2,000,000 total fixed manufacturing overhead + 80,000 pairs of sunglasses Print Done
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