Question
T's produces white school glue. Their glue bottles are primarily sold at department stores across the country. The cost of manufacturing and marketing their glue,
T's produces white school glue. Their glue bottles are primarily sold at department stores across the country. The cost of manufacturing and marketing their glue, at their normal factory volume of 20,000,000 bottles of glue per month, is shown in the table below. T's sells their glue bottles for $1.50 each. T's is making a small profit, but they would prefer to increase their Operating Income An office supply chain has offered to purchase 10,000,000 bottles of glue (one time in one month) if the sales price was lowered to $1.25 per bottle for that one-time sale. (This specific sale is all or nothing they will not purchase less than 10,000,000 bottles). Ts maximum capacity is 25,000,000 units, and this special sale would not impact the sales price of Ts normal sales to their usual customer base.
Prepare a monthly contribution margin income statement to show what would happen if Ts accepted the special sale to the office store chain and didnt sell any other glue that month.
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