Question

1 1 Exercise 4-36 (Static) Special Orders (LO 4-1,2) 0.75 poing 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 3,000 meals Sales revenue Contot malo pred So proti Imount $10.000 13.500 $4,500 2,100 Per tris $6.00 4.50 $1.50 0.70 Operating proti Block Pynt Fixed costs included in this income statement are $4,500 for meal production and 5600 for administrative costs. Mana has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.50 per meal for 300 meals on April 10. Maria has sufficient de capacity to fill the special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fed costs will not be affected Required: .. What impact would accepting this special order have on operating profit? (Select option higher or lower, keeping Status Quo as the bese. Select "none" if there is no effect) stus Amative 3.300 units Dette $ 18.000 table Meat her Admin Corting higher

Answer 1

	3000 Units	3300 Units	Difference	Difference
Sales revenue	$18,000	$19,035	$1,035	Higher
Variable costs:		(18000+(300*3.45))
Meals	$9,000	$9,900	$900	Higher
	(13500-4500)	(9000/3000*3300)
Administrative cost	$1,500	$1,500	$0	None
	(2100-600)
Contribution margin	$7,500	$7,635	$135	Higher
Fixed cost	$5,100	$5,100	$0	None
	(4500+600)
Operating profit	$2,400	$2,535	$135	Higher