Consider the Electro Breeze special sales order example on pages 434–435. Suppose Electro Breeze’s variable manufacturing cost is $1.35 per air filter (instead of $1.20). In addition, Electro Breeze would have to buy a special stamping machine that costs $9,000 to mark the customer’s logo on the special-order air filters. The machine would be scrapped when the special order is complete.
Expected increase in revenues—sale of 20,000 oil filters × $1.75 each...$35,300
Expected increase in expenses—variable manufacturing costs:
20,000 oil filters × $1.20 each.................... (24,000)
Expected increase in operating income................$11,000
Would you recommend that Electro Breeze accept the special order under these conditions? Show your analysis.

  • CreatedApril 30, 2015
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