Prepare an incremental analysis schedule

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Reference no: EM131972014

Problem

Rosie's manufactures silk flowers. ABC Company has approached Rosie's with a proposal to buy 2,000 silk flowers for $4.00 each. Regular customers are charged $4.25 for each flower. Rosie's has the necessary capacity. The following costs are associated annually with silk flowers with the company's normal production and sales of 10,000 flowers:

Direct material $21,000

Direct labor 13,000

Manufacturing overhead 9,000

Total $43,000

Forty percent of the manufacturing overhead is variable. All fixed overhead is allocated equally to all products produced.

Requirements: Prepare an incremental analysis schedule to demonstrate what amount operating income would increase or decrease as a result of accepting the special order.

Reference no: EM131972014

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