A new retail store has offered to buy 14,800 of its skateboards for $53 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following:

• Direct materials and direct labor are 100% variable.
• 30 percent of overhead is fixed at any production level from 80,300 units to 95,000 units; the remaining 70% of annual overhead costs are variable with respect to volume.
• Selling expenses are 70% variable with respect to the number of units sold, and the other 30% of selling expenses are fixed.
• There will be an additional $1.10 per unit selling expense for this order.
• Administrative expenses would increase by a $900 fixed amount.

Required:
Prepare a three-column comparative income statement that reports the following:

a. Annual income without the special order.
b. Annual income from the special order.
c. Combined annual income from normal business and the new business. 

Answer rating: 100% (QA)

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