Leno Company manufactures toasters. For the first 8 months of 2014, the company reported the following operating results while operating at 75% of plant capacity:
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Sales revenue (350,000 units) Don't use plagiarized sources. Get Your Custom Essay on
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$4,375,000 |
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Cost of goods sold |
2,600,000 |
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Gross profit |
1,775,000 |
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Operating expenses |
840,000 |
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Net income |
$ 935,000 |
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed.
In September, Leno Company receives a special order for 15,000 toasters at $7.60 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping costs but no increase in fixed operating expenses.
Instructions
(a)Prepare an incremental analysis for the special order.
(b)Should Leno Company accept the special order? Why or why not?
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