Maria's Food Service provides meals that non-profit organizations distribute to the disabled and elderly. This is his expected income statement for April, when he expects to produce and sell 3,900 meals:

	Amount			Per unit
sales revenue	ps	26,910		ps	6.90
Costs of meals produced		19,305			4.95
Gross profit	ps	7,605		ps	1,95
Administrative costs		3,120			.80
operating profit	ps	4,485		ps	1.15

Fixed costs included in this income statement are $6,201 for flour production and $780 for administrative costs. Maria has received a special request from an organization that is sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.95 per meal for 300 meals on April 10. Maria has enough spare capacity to meet this special request. These meals will incur all the variable costs of the meals produced, but the variable administrative costs and total fixed costs will not be affected.

Required:

What impact would accepting this special order have on operating income?

Answer rating: 100% (QA)

Special order 300 meals at 395 per meal Variable cost per meal 495 Fixed costs 6201 for flour produc... View the full answer