Texas Controls Inc. began operations in $20$X$1$ to manufacture a single product. There are no ending work$-$in$-$process inventories. Relevant data for the year follow:

OPERATING DATA FOR $20$X$1$

Quantities:

Beginning inventories, finished goods $0$

Units produced during the year $6,600$

Units sold during the year $5,800$

Costs:

Direct materials $($$$32$ per unit$)$ $ $211,200$

Direct labor $($$$30$ per unit$)198,000$

Variable factory overhead $($$$18$ per unit$)118,800$

Fixed factory overhead $64,000$

Variable selling and administrative expenses $($$$17$ per unit$)98,600$

Fixed selling and administrative expenses $83,000$

Selling price for each unit $133$

Required:

Prepare an income statement for $20$X$1$ using direct costing.

$2$a$.$ Assume that the company has an opportunity to sell $800$ units of the product in a foreign country for $$105$ per unit. No fixed or variable selling and administrative expenses would be incurred in connection with these units except shipping costs of $$16$ per unit and miscellaneous administrative expenses of $$1$ per unit. The company has idle capacity, and the order would not affect present markets. Compute marginal income or loss on order.

$2$b$.$ Would it be profitable for the company to accept the order?

Analyze:

What percentage of the foreign sales order would be realized as marginal income?