Question

Maria's Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. The following is her forecasted Income statement for April, when she expects to produce and sell 2700 meals: Sales revenue Costs of meals produced Gross profit Administrative costs Operating profit Amount $ 15,398 11.745 $ 3,645 2,160 $ 1,485 Per Unit $ 5.70 4.35 $ 1.35 $8.55 Fixed costs included in this income statement are $3.969 for meal production and $540 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.35 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected. Required: a. What Impact would accepting this special order have on operating profit? (Select option "higher" or "lower, keeping Status Quo as the bose. Select "none" If there is no effect.) Answer is not complete. Status Quo 2,700 Alternative 3 000 Units Difference 15.300 10.3061 .005 her 0.100 1.630 1.020 none Contribution man 4.500 4,800 none Operasne profit PSY 107H Next >

Answer 1

Difference Status Quo 2,700 units $ 15,390.00 Alternative 3,000 units 16,395.00 $ $ 1,005.00 Higher 864.00 JUT Sales Revenue Variable Costs Meals Administrative Contribution Margin Fixed Costs Operating Profit $ $ 7,776.00 1,620.00 $ $ 8,640.00 $ 1,620.00 $ Higher None None $ $ 4,509.00 1,485.00 $ $ 4,509.00 $ 1,626.00 $ 141.00