Reference no: EM131795429
Question - Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating results while operating at 75% of plant capacity.
Sales (400,000 units) $4,000,000
Cost of goods sold 2,400,000
Gross profit 1,600,000
Operating expenses 900,000
Net income $ 700,000
Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 60% variable and 40% fixed.
In September, Wyco Company receives a special order for 40,000 toasters at $6.00 each from Salono Company of Mexico City. Acceptance of the order would result in $8,000 of shipping costs but no increase in fixed operating expenses.
Instructions -
(a) Prepare an incremental analysis for the special order.
(b) Should Wyco Company accept the special order? Why or why not?