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This Question: 2 pts 3 of 3 (3 complete) More Info Relax Products manufactures t-shirts. It has the following costs when its production level is
This Question: 2 pts 3 of 3 (3 complete) More Info Relax Products manufactures t-shirts. It has the following costs when its production level is 70,000 units (t-shi (Click the icon to view the costs.) 1 (Click the ioon to view additional information.) The company's relevant range extends to 82,000 units. Relax has received a special order for 7,000 t-shirts at a special price of $42,000 for the entire order. The special order t-shirt would use a fabric that is less expensive than the standard fabric used by Relax, which would allow Relax to save $0.30 per t-shirt in direct materials when manufacturing this special order. Relax has the excess capacity to manufacture this special order. Its total fixed costs will not be impacted by the special order What will happen to Relax's operating income if it accepts this special order? Complete the following incremental analysis to determine the impact on Relax's operating income if it accepts and/ormanufacture this special order. Its "O" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/ Total Order (7,000 units) Incremental Analysis of Special Sales Order Decision Per Unit Print Done 42 Revenue from special order Less variable expense associated with the order: Direct materials Direct labor Variable manufacturing overhead Contribution margin Less: Additional fixed expenses associated with the order Increase (decrease) in operating income from the special order Relax Total costs for 70,000 units Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead 245,000 17,500 63,000 90,000 415,500 Total manufacturing costs Vaccept the special sales order because it will Voperating income Print Done
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