Question

# Calla Company produces skateboards that sell for \$66 per unit. The company currently has the capacity...

 Calla Company produces skateboards that sell for \$66 per unit. The company currently has the capacity to produce 95,000 skateboards per year, but is selling 82,000 skateboards per year. Annual costs for 82,000 skateboards follow.

 Direct materials \$ 975,800 Direct labor 697,000 Overhead 946,000 Selling expenses 557,000 Administrative expenses 464,000 Total costs and expenses \$ 3,639,800

 A new retail store has offered to buy 13,000 of its skateboards for \$61 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following:
 • Direct materials and direct labor are 100% variable. • 40 percent of overhead is fixed at any production level from 82,000 units to 95,000 units; the remaining 60% of annual overhead costs are variable with respect to volume. • Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are fixed. • There will be an additional \$2.1 per unit selling expense for this order. • Administrative expenses would increase by a \$860 fixed amount.

 Required: Prepare a three-column comparative income statement that reports the following:
a. Annual income without the special order.
b. Annual income from the special order.

(Do not round your intermediate calculation round your cost and expenses values to nearest whole decimal places.)

 CALLA COMPANY COMPARATIVE INCOME STATEMENTS Normal Volume Additional Volume Combined Total Costs and expenses: Total costs and expenses 0 0 0 Operating income

#### Earn Coins

Coins can be redeemed for fabulous gifts.