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The Gannett Company provides landscaping services to corporations and businesses. All its landscaping work requires Gannett to use landscaping equipment. Its landscaping equipment has the
The Gannett Company provides landscaping services to corporations and businesses. All its landscaping work requires Gannett to use landscaping equipment. Its landscaping equipment has the capacity to do 14,500 hours of landscaping work. It is currently utilizing 12,000 hours of equipment time. Gannett charges $100 per hour for landscaping work. Cost information for the current activity level is as follows: (Click the icon to view the cost information.) Read the requirement Begin by determining the change in operating income if Gannett accepts the special order. (If a box is not used in the table, leave the box empty; do not select a label or enter a zero. Use parentheses or a minus sign to enter a decrease in operating income.) i Requirement Less: Increase (decrease) in operating income by accepting the one-time special order Gannett has just received a one-time only special order for landscaping work from Rose Corporation at $50 per hour that would require 2,500 hours of equipment time. Should Gannett accept the offer even though revenue per hour is less than Gannett's landscaping cost of $73 per hour [($780,000 + $96,000) / 12,000 hours)). No marketing costs will be necessary for the one-time only special order. i Data Table Print Done $ 1,200,000 780,000 Revenues ($100 x 12,000 hours) Variable landscaping costs (including materials and labor), which vary with the number of hours worked ($65 per hour x 12,000 hours) Fixed landscaping costs Variable marketing costs (3% of revenues) Fixed marketing costs 96,000 36,000 71,000 983,000 217,000 Total costs $ Operating income Choose from any list Print Done 1 part I remaining Check
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