Wyco Company manufactures toasters. For the first 8 months of 2009, the company reported the following operating results while operating at 75% of plant capacity.
Sales (400,000 units) $4,000,000
Cost of goods sold
2,400,000
Gross profit 1,600,000
Operating expenses
900,000
Net income
$700,000
Cost of goods sold was 70% variable and 30% fixed. Operating expenses were also 60% variable and 40% fixed.
In September, Wyco Company receives a special order for 40,000 toasters at $6.00 each from Salono Company of Mexico City. Acceptance of the order would result in $8,000 of shipping costs but no increase in fixed operating expenses.
Prepare an incremental analysis for the special order.
Reject Order Accept Order Net Income
Increase
(Decrease)
Revenues
Cost of goods sold
Operating expense
Net income