TRYING TO GURE OUT HOW TO CALCULATE OVERHEAD & SELLING EXPENSE IN THIS COMPARATIVE INCOME STATEMENT

Calla Company produces skateboards that sell for $54 per unit. The company currently has the capacity to produce 95.000 skateboards per year, but is selling 80,500 skateboards per year. Annual costs for 80,500 skateboards follow Direct waterials Direct labor Selling expenses isteative Expenses Total costs and expenses A new retail store has offered to buy 14,500 of its skateboards for $49 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: Direct materials and direct labor are 100% variable. . 40 percent of overhead is fixed at any production level from 80.500 units to 95,000 units the remaining 60% of annual Overhead costs are variable with respect to volume . Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are foved. There will be an additional $1.50 per unit selling expense for this order Administrative expenses would increase by a $890 foxed amount Required: 1. Prepare a three-column comparative Income statement that reports the following: a. Annual income without the special order b. Annual income from the special order c. Combined annual income from normal business and the new business. 2 Should Calla accept this order? Combined $ 5.057.500 CALLA COMPANY COMPARATIVE INCOME STATEMENTS Normal Additional Volume Volume Sales $ 4.347.000 $ 710.500 Costs and expenses Direct materials 821.100 147,900 Direct labor 587,850 105.890 Overhead 959.000 120.918 Selling expenses 550.000 69.348 Administrative expenses 474.000 890 900.000 092 500 1.079 918 619.345 4 74 890 Total costs and expenses Operating income 3.391.780 956 250 4 44 904 S 285 596 3.838.034 51 220 948 $