Question

In: Accounting

SampsonSampson Industries has an annual plant capacity of 71 comma 00071,000 ?units; current production is 60...

SampsonSampson

Industries has an annual plant capacity of

71 comma 00071,000

?units; current production is

60 comma 00060,000

units per year. At the current production? volume, the variable cost per unit is

$ 35.00$35.00

and the fixed cost per unit is

$ 3.90$3.90.

The normal selling price of

SampsonSampson?'s

product is

$ 47.00$47.00

per unit.

SampsonSampson

has been asked by

DexterDexter

Company to fill a special order for

7 comma 0007,000

units of the product at a special sales price of

$ 29.00$29.00

per unit.

DexterDexter

is located in a foreign country where

SampsonSampson

does not currently operate.

DexterDexter

will market the units in its country under its own brand?name, so the special order is not expected to have any effect on

SampsonSampson?'s

regular sales. Read the requirements

LOADING...

.Requirement 1. How would accepting the special order impact

SampsonSampson?'s

operating? income? Should

SampsonSampson

accept the special? order?Complete the following incremental analysis to determine the impact on

SampsonSampson?'s

operating income if it accepts this special order. ?(Enter a? "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin? and/or operating income from the special?order.)

Total Order

Incremental Analysis of Special Sales Order Decision

(7,000 units)

Revenue from special order

Less expenses associated with the order:

Variable manufacturing cost

Contribution margin

Less: Additional fixed expenses associated with the order

Increase (decrease) in operating income from the special order

Sampson

accept the special sales order because it will

operating income.

Requirement 2. How would your analysis change if the special order sales price were to be

$ 36.00$36.00

per unit and

SampsonSampson

would have to pay an attorney a fee of

$ 11 comma 000$11,000

to make sure it is complying with export laws and regulations relating to the special? order? ?(Enter a? "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin? and/or operating income from the special? order.)

Total Order

Incremental Analysis of Special Sales Order Decision

(7,000 units)

Revenue from special order

Less expenses associated with the order:

Variable manufacturing cost

Contribution margin

Less: Additional fixed expenses associated with the order

Increase (decrease) in operating income from the special order

Sampson

accept the special sales order because it will

operating income.

Solutions

Expert Solution

Hi

Let me know in case any issue and query:

ekkarill92 answered 1 year ago
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