Texas Controls Inc. began operations in 2019 to manufacture a single product. There are no ending work-in-process inventories. Relevant data for the year follow:

OPERATING DATA FOR 2019
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:

1. Prepare an income statement for 2019 using direct costing.
2. 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. Would it be profitable for the company to accept the order?

Prepare an income statement for 2019, using direct costing.

TEXAS CONTROLS INC.
Income Statement (Direct Costing)
Year Ended December 31, 2019
Cost of goods sold
Cost of goods manufactured
Total cost of goods manufactured		$0
Cost of Goods Sold
			$0
			$0
Fixed costs and expenses
Total fixed costs and expenses			0
			$0

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.

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TEXAS CONTROLS INC.
Computations
Foreign Sales Order
Sales
Variable manufacturing costs
Materials
Labor
Overhead
Total variable manufacturing costs		0
Manufacturing margin		$0
Variable shipping and administrative costs
Marginal income on order		$0