Reference no: EM132425691

Question - Mathers Co. manufactures tote bags. The forecasted income statement for the year before any special orders included sales of $3,200,000 (sales price is $10 per unit.) Manufacturing cost of goods sold is anticipated to be $2,100,000. Selling expenses are expected to be $250,000, and operating income is projected at $850,000. Fixed costs included in these forecasted amounts are $1,300,000 for manufacturing cost of goods sold. Ronco is offering a special order to buy 40,000 tote bags for $7.50 each. There will be no additional selling expenses, and sufficient capacity exists to manufacture the extra tote bags.

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