Question

0.48/2 Question 1 View Policies Show Attempt History Current Attempt in Progress Conklan Company manufactures outdoor fireplaces. For the first 9 months of 2020, the company reported the following operating results while operating at 80% of plant capacity: Sales (78,100 units) Cost of goods sold Gross profit Operating expenses Net income $7,107,100 4,978,875 2,128.225 781,000 $1,347.225 Cost of goods sold was 80% variable and 20% fixed; operating expenses were 70% variable and 30% fixed. In October, Conklan Company receives a special order for 4,000 fireplaces at $61 each from Langston's Landscape Company. Acceptance of the order would result in an additional $6,400 of shipping costs but no increase in fixed operating expenses. Your answer is partially correct. Prepare an incremental analysis for the special order. (Enter loss using either a negative sign preceding the numbereg. 2.945 or parentheses eg. 2,9450) Type here to search oie x Pa 9 10:40 PM 10/31/201975

Answer 1

Old sales price per unit = $91 each

Cost of goods sold variable cost = 80% * 4978875 = 3983100

Cost of goods sold variable cost per unit = 3983100 / 78100 = $51 each

Cost of goods sold fixed cost = 20% * 4978875 = 995775

Operating expenses variable cost = 80% * 781000 = 624800

Operating expenses variable cost per unit = 624800 / 78100 = $8 each

Operating expenses fixed cost = 20% * 781000 = 156200

Incremental analysis for the special order:

	78100 units	82100 units
	Reject Oder	Accept order	Net Income Increase / (Decrease)
Revenues	7107100	7351100	244000
Cost of Goods sold variable cost	3983100	4187100	204000
Cost of goods sold fixed cost	995775	995775	0
Operating expenses variable cost	624800	656800	32000
Operating expenses fixed cost	156200	156200	0
Shipping expenses	0	6400	6400
Net Income	$1347225	$1348825	$1600

The special order should be accepted.