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Chapter 8: Exercises 2, 6, and 9, P8-3A
E7-3
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 (350,000 units)
$4,375,000
Cost of goods sold 2,600,000
Gross profit 1,775,000
Operating expenses 840,000
Net income $ 935,000
Cost of goods sold was 70% variable and 30% fixed; operating
expenses were 80% variable and 20% fixed.
In September, Moonbeam receives a special order for 15,000 toasters
at $7.60 each from Luna Company of Ciudad Juarez. Acceptance of
the order would result in an additional $3,000 of shipping costs but no
increase in fixed costs.
Instructions
a. Prepare an incremental analysis for the special order.
b. Should Moonbeam accept the special order? Why or why not?
E7-7
Riggs Company purchases sails and produces sailboats. It currently
produces 1,200 sailboats per year, operating at normal capacity, which