Question

Swifty Company manufactures toasters. For the first 8 months of 2017, the company reported the following operating results while operating at 75% of plant capacity: Sales (350,400 units)$4,380,000 Cost of goods sold2,593,000 Gross profit1,787,000 Operating expenses839,900 Net income$947,100 Cost of goods sold was 71% variable and 29% fixed; operating expenses were 81% variable and 19% fixed. In September, Swifty receives a special order for 20,200 toasters at $8.09 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed costs. (a) Prepare an incremental analysis for the special order.

Answer 1

Preparation of incremental analysis is below

Step-by-step explanation:

The preparation of incremental analysis for the special order is shown below:-

Sales $163,418

20,200 × $8.09

Less: Variable cost of goods sold $106,132.43

($2,593,000 × 71% ÷ 350,400) × 20,200

Less: Operating expenses $39,219.30

(839,900 × 81% ÷ 350,400) × 20,200

Less: Addition cost $3,000

Net profit $15,066.27