Question

The following operating information reports the results of McKinney Company's production and sale of 16,000 air-conditioned motorcycle helmets last year. Based on early market forecasts, McKinney expects the same results this year.
Sales .................. $1,920,000
Variable manufacturing expenses........ 880,000
Fixed manufacturing expenses ........ 272,000
Variable selling and administrative expenses .. 128,000
Fixed selling and administrative expenses .... 224,000

The American Motorcycle Club has offered to purchase 1,500 helmets at a price of $60 each. McKinney has sufficient idle capacity to fill the order, which would not affect the company's cost structure or regular sales.

Required
If McKinney accepts this order, by how much will its income increase or decrease?



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  • CreatedFebruary 21, 2014
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