Boyer Company manufactures basketballs. Data from the forecasted income statement for the year before any special orders
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Question:
Boyer Company manufactures basketballs. Data from the forecasted income statement for the year before any special orders are as follows:
Amount | Per Unit | ||||
Sales Revenue | $4,000,000 | $10.00 | |||
Manufacturing Cost | $3,200,000 | $8.00 | |||
Gross Profit | $800,000 | $2.00 | |||
Marketing Cost | $300,000 | $0.75 | |||
Operating Profit | $500,000 | $1.25 |
Fixed costs included in the above forecasted income statement are $1,200,000 in manufacturing costs and $100,000 in marketing costs.
A special order offering to buy 50,000 basketballs for $7.50 each was made to the CEO of Boyer. There will be no variable marketing costs on the special order as the CEO approached you.
Required:
- What would be the impact of accepting the special order on the operating profit of the firm?
Related Book For
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins
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