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:
| Sales (349,400 units) |
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$4,379,300 |
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| Cost of goods sold |
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2,598,600 |
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| Gross profit |
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1,780,700 |
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| Operating expenses |
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840,800 |
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| Net income |
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$939,900 |
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Cost of goods sold was 71% variable and 29% fixed; operating expenses were 76% variable and 24% fixed.
In September, Leno Company receives a special order for 23,600 toasters at $8.40 each from Centro Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,070 of shipping costs but no increase in fixed operating expenses.
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Prepare an incremental analysis for the special order. (Round computations for per unit cost to 4 decimal places, e.g. 15.2500 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
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Reject
Order |
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Accept
Order |
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Net Income
Increase
(Decrease) |
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| Revenues |
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$ |
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$ |
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$ |
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| Cost of goods sold |
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| Operating expenses |
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| Net income |
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$ |
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$ |
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$ |
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Should Leno Company accept the special order?
RejectAccept
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