Jerston Company has an annual plant capacity of 4,000 units.
Data concerning this product are given below:

Annual Sales at Regular Selling Prices 
3,400 
Units 

Manufacturing Costs: 



Variable 
$15.00 
Per Unit 

Fixed 
$60,000.00 
Per Year 

Selling and Administrative Expenses: 



Variable 
$4.00 
Per Unit 

Fixed 
$8,500.00 
Per Year 
The company has received a special order for 600 units at a
selling price of $22 each. Regular sales would not be affected, and
sales commissions on the 600 units would be reduced by onefourth.
This special order would have no impact on total fixed costs.
INSTRUCTIONS Determine whether the company should accept
the special order. When complete, answer each of the following by
selecting the correct match from the list provided.
 
What is the incremental revenue related to the special
order?

 
What is the incremental manufacturing costs related to the
special order?

 
What is the incremental selling and administrative expenses
related to the special order?

 
Is there an advantage or a disadvantage to accepting the special
order?

 
What is the amount of the advantage or disadvantage related to
accepting the special order?


A. 
$2,400

B. 
$1,800

C. 
Advantage

D. 
$13,200

E. 
$9,000

