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The Nature Company provides landscaping services to corporations and businesses. All its landscaping work requires Nature to use landscaping equipment. Its landscaping equipment has the
The Nature Company provides landscaping services to corporations and businesses. All its landscaping work requires Nature to use landscaping equipment. Its landscaping equipment has the capacity to do 12,500 hours of landscaping work. It currently anticipates getting orders that would utilize 12,000 hours of equipment time from existing customers. Nature charges $100 per hour for landscaping work. Cost information for the current expected activity level is as follows: (Click the icon to view the cost information.) Read the requirement. Begin by completing an analysis, and start by showing the computation of the company's operating income without the special order. Next, calculate operating income with the special order, and then determine whether Nature should accept or reject the special order. Without With i Data Table One-Time Only Special Order 1,200,000 One-Time Only Special Order Relevant revenues $ 1,200,000 Relevant variable costs: 780,000 Landscaping costs $ Revenues ($100 * 12,000 hours) Variable landscaping costs (largely labor), which vary with the number of hours worked ($65 per hour * 12,000 hours) Fixed landscaping costs Variable marketing costs (5% of revenues) Fixed marketing costs 780,000 60,000 96,000 Marketing costs 60,000 67,000 $ Total relevant costs 840.000 $ 360,000 1,003,000 Relevant operating income Total costs $ 197,000 Requirement Operating income Print Done Nature has received an order for landscaping work from Ashley Corporation at $62 per hour that would require 2,200 hours of equipment time. Variable landscaping costs for the Ashley Corporation order are $65 per hour and variable marketing costs are 5% of revenues. Nature can either accept the Ashley offer in whole or reject it. Should Nature accept the offer? Enter any number in the edit fields and then click Check ? part 1 pemaining Print Done Check
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