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24 May, 13:30

Moonbeam Company manufactures toasters. For the first 8 months of 2017, the company reported the following operating results while operating at 75% of plant capacity: Sales (349,000 units) $4,370,000 Cost of goods sold 2,590,000 Gross profit 1,780,000 Operating expenses 839,000 Net income $941,000 Cost of goods sold was 65% variable and 35% fixed; operating expenses were 75% variable and 25% fixed. In September, Moonbeam Company receives a special order for 15,000 toasters at $7.50 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $2,900 of shipping costs but no increase in fixed costs.

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  1. 24 May, 13:38
    0
    Step-by-step explanation:

    Given:

    Units, u = 349,000 units

    Cost of goods sold:

    variable = 65%

    fixed = 35%

    Operating expenses:

    variable = 75%

    fixed = 25%

    Cost of goods sold, C = $ 2,590,000

    Operating expenses, O = $839,000

    Sales, S = $4,370,000

    Gross profit, G = $1,780,000

    Net income, I = $941,000

    Variable cost of goods sold, C1 = Cost sold * variable %

    = $ 2,590,000 x 65%

    = 1,683,500

    Variable cost per unit = Variable cost, C1/units

    = 1,683,500 / 349,000

    = $4.82 variable cost per unit

    Variable Operating expenses, O1 = operating expenses, O * variable %

    = $839,000 x 75%

    Variable cost per unit = variable operating expenses/units

    = 629,250/349,000

    = $1.80 variable cost per unit

    Incremental analysis:

    Given:

    Number of toasters, i = 15,000

    cost per 1 toaster = $7.50

    Revenue, r = (15000 * 7.50)

    = $112500

    Cost of Goods Sold, Cs = variable cost per unit * units of toasters

    = (15,000 x 4.82)

    = $72300

    Operating Expenses, Os = (variable operating expenses per unit * units of toasters) + additional shipping costs

    = (15,000 x 1.8) + 2900

    = $27000 + $2900

    = $29900

    Net Income, N = revenue, r - (cost of goods sold, Cs + operating expenses, Os)

    = $112500 - ($72300 + $29900)

    = $10,300 gain

    B.

    Accept the offer.
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