Question

Sandhill 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 (341,600 units)		$4,372,000
Cost of goods sold		2,605,920
Gross profit		1,766,080
Operating expenses		841,190
Net income		$924,890

Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed.

In September, Sandhill receives a special order for 20,100 toasters at $7.59 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 fixed costs.

(a)

Prepare an incremental analysis for the special order. (Round computations for per unit cost to 2 decimal places, e.g. 15.25 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Reject Order		Accept Order		Net Income Increase (Decrease)
Revenues		$enter a dollar amount		$enter a dollar amount		$enter the difference between the two previous amounts in the row
Cost of goods sold		enter a dollar amount		enter a dollar amount		enter the difference between the two previous amounts in the row
Operating expenses		enter a dollar amount		enter a dollar amount		enter the difference between the two previous amounts in the row
Net income		$enter a total amount		$enter a total amount		$enter a total amount

(b)

Should Sandhill accept the special order?

Sandhill Company select between should accept and should reject                                                          should rejectshould accept the special order.

Answer 1

.