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Zucchini Company produces and sells 35,000 packs of zucchini noodles each year. The following information reflects a breakdown of its costs: Cost Item Costs per

Zucchini Company produces and sells 35,000 packs of zucchini noodles each year. The following information reflects a breakdown of its costs:

Cost Item

Costs per Pack

Total Costs

Variable production costs

$12

$420,000

Fixed production costs

$8

$280,000

Variable selling costs

$5

$175,000

Fixed selling and administrative costs

$3

$105,000

Total costs

$28

$980,000

Zucchini marks up its prices 50% over full costs. It has surplus capacity to produce 10,000 more packs. A South African supermarket company has offered to purchase 8,000 packs of the product at a special price of $32 per pack. Zucchini will incur additional shipping and selling costs of $2 per pack to complete this order.

Required: (a) What will be the effect on Zucchini's operating income if it accepts this order? (b) Calculate the incremental revenue and costs associated with the order.

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