Reference no: EM132193356

Question - Our Company has an offer for a special order for 1,000 units at $45 each. Below are our traditional and contribution margin income statement from the previous year when we produced 20,000 units. We must incur additional fixed costs of $2,000 to be able to fill this order, and we will not incur any additional operating expense. What would be our profit on this special order?

Traditional Income Statement		Contribution Margin Income Statement
Sales Revenue	$1,000,000	Sales Revenue		$1,000,000
Less COGS	($600,000)	Less Variable Expenses:
Gross Profit	$400,000	Manufacturing	$(400,000)
Less operating expenses	($300,000)	Operating	($50,000)	$(450,000)
Operating Income	$100,000	Contribution Margin		$650,000
		Less Fixed Expenses:
		Manufacturing	($250,000)
		Operating	($300,000)	($550,000)
		Operating Income		$100,000

a) $17,000

b) $22,000

c) $23,000

d) $25,000