In: Accounting
1
Fixed selling and adminstrative expense=225,000
Variable selling and admin expenditure=405,000-225,000=$180,000
Selling and admin expenditure per unit=180,000/120,000
=$1.5
Selling and administrative expenditure for special order
=10,000*1.5
=$150,000
2
Statement showing calculation of additional income or cost for the special order
Per unit | Total (10,000) | |
Sales | $28 | $28,000 |
Direct material | $9 | $9,000 |
Direct labor | $11 | $11,000 |
Selling and adminsitrative | $1.5 | $1,500 |
Total cost | $21.5 | $21,500 |
Additional income | $6,500 |
Direct material cost per unit=1080000/120000
Direct material cost per unit=9
Direct labor cost per unit=1320000/120,000
Direct labor cost per unit=11
Statement showing icnremental analysis
Without accepting order | After accepting order | Increase/(Decrease) | |
Sales | $5,100,000 | $5,128,000 | $28,000 |
Direct material | $1,080,000 | $1,089,000 | $9,000 |
Direct labor | $1,320,000 | $1,331,000 | $11,000 |
Manufacturing overhead | $1,200,000 | $1,200,000 | 0 |
Selling and administrative expense | $405,000 | $406,500 | $1,500 |
Income | $1,095,000 | $1,101,500 | $6,500 |
3
There is a increase in the income of $6,500 from the special order and the order should be accepted