Question

ment CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT Exercise 20-03 Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity: Sales (336,000 units) $4,377,000 Cost of goods sold 2,592,000 Gross profit 1,785,000 Operating expenses 840,000 Net Income $945.000 Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% Variable and 20% fixed. In September, Moonbeam receives a special order for 21,600 toasters at $8.12 each from Luna Company of Cludad Juarez, Acceptance of the order would result in an additional $3,100 of shipping costs but no increase in fixed costs. Prepare an incremental analysis for the special order. (Round computations for per unit cost to 2 decimal places, e.g. 15.25 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

	Reject Order	Accept order	Net Income Increase/(Decrease)
Revenues 21600*8.12	0	175,392	175,392
Cost of goods sold (2592000*70%)/336000*21600	0	(116,640)	(116,640)
Operating expenses (840000*80%)/336000*21600+3100	0	(46,300)	(46,300)
Net income	0	12,452	12,452
Moonbeam company should accept the special order
Because It is earning an additional income of 12452