Question
X company manufacture toasters. For the first 8 months of 2010, the company reported the following operating results while operating at 75% of plant capacity:
X company manufacture toasters. For the first 8 months of 2010, the company reported the following operating results while operating at 75% of plant capacity:
Sales (350,000 units) $4,375,000
Cost of goods sold $2,600,000
Gross Profit $1,775,000
Operating expenses $840,000
Net Income $935,000
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed. In september, X company receives a special order for 15,000 toasters at $7.6. Acceptance of the order would result in additional $3000 of shipping costs but no increase in fixed operating expenses.
a) prepare an incremental analysis for the special order
b) should x company accept the order? why or why not?
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