Question

Wright Corporation's contribution format Income statement for last month appears below. Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 87,000 35.400 51.600 16.200 $ 35,400 There were no beginning or ending Inventories. The company produced and sold 3,000 units during the month. The company has an opportunity to secure a special order of 870 units If It is willing to drop the selling price on these units to $27. Costs of securing the special order would be $1,140. The special order would not affect the company's regular sales. If the special order is accepted, the company's overall net operating Income will: (Do not round Intermediate calculations.) increase by $13,224 increase by $12,084 increase by $3,870 O remain the same

Answer 1

Wright's Corporation income statement
	Total for 3000 units	per unit
	$	$
Sales	87000	29
Less: Variable expenses	35400	11.8
Contribution margin	51600	17.2
Less: Fixed expenses	16200
Net operating income	35400
Net operating income of additional order (870 units)
	Total for 870 units	per unit
Sales	23490	27
Less: Variable expense	10266	11.8
Contribution margin	13224	15.2
Les: Cost of securing order	1140
	12084
So the company's net operating income will increase by $ 12084