Question

Sheffield Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity: Sales (369,600 units) $4,372,000 Cost of goods sold 2.597,760 Gross profit 1.774,240 Operating expenses 836,220 Net income $938,020 Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Sheffield receives a special order for 21.800 toasters at $7.00 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,100 of shipping costs but no increase in foed costs. Prepare an incremental analysis for the special order. (Round computations for per unit cost to 2 decimal places.cz 15.25 and sil other computations and finanswers to the nearest whole dollar.cs5.725. Exeter negative amounts using eithers negative sige preceding the numberes 45 or serentheses 4314511 Accept Reject Order Net Income Increase (Decrease) Revenues Cost of goods sold Operating expenses Net income Should Sheffield accept the special order? Sheffield Company cial order. should reject should accept Textbook and

Answer 1

a) Incremental analysis

	Reject order	Accept order	Net income increase (decrease)
Revenues	0	21800*7.80 = 170040	170040
Cost of goods sold	0	21800*4.92 = -107256	-107256
Operating expenses	0	21800*1.81+3100 = -42558	-42558
Net income	0	20226	20226

b) Should accept the special order