Columbus Company supplies colleges with floor mats to use in physical education classes. Columbus has received...

  

  

Transcribed Image Text:

Columbus Company supplies colleges with floor mats to use in physical education classes. Columbus has received a special order from a college system to buy 600 mats at $49 each. Acceptance of the special order will not affect fixed costs but will result in $500 of shipping costs. For the first 6 months of 2020, the company reported the following operating results while making 100,000 units and operating at 80% capacity: Sales (100,000 units) S7,000,000 Cost of goods sold 4,400,000 Gross profit 2,600,000 Operating expenses 2,000,000 Net income $ 600,000 Variable cost of goods sold was $33 per mat and variable operating expenses were $12 per mat. Gross profit 2,600,000 Operating expenses 2,000,000 Net income 600,000 Variable cost of goods sold was $33 per mat and variable operating expenses were $12 per mat. Instructions: Answer each of the following questions. Round the answer to the nearest dollar. 1. What is the maximum capacity in mats? 2. What is the incremental impact on net income of accepting the special order? 3. Should the company reject the order or accept the order? Type the word "Reject" or "Accept." Columbus Company supplies colleges with floor mats to use in physical education classes. Columbus has received a special order from a college system to buy 600 mats at $49 each. Acceptance of the special order will not affect fixed costs but will result in $500 of shipping costs. For the first 6 months of 2020, the company reported the following operating results while making 100,000 units and operating at 80% capacity: Sales (100,000 units) S7,000,000 Cost of goods sold 4,400,000 Gross profit 2,600,000 Operating expenses 2,000,000 Net income $ 600,000 Variable cost of goods sold was $33 per mat and variable operating expenses were $12 per mat. Gross profit 2,600,000 Operating expenses 2,000,000 Net income 600,000 Variable cost of goods sold was $33 per mat and variable operating expenses were $12 per mat. Instructions: Answer each of the following questions. Round the answer to the nearest dollar. 1. What is the maximum capacity in mats? 2. What is the incremental impact on net income of accepting the special order? 3. Should the company reject the order or accept the order? Type the word "Reject" or "Accept."

Answer rating: 100% (QA)

Answers are highlighted in yellow Solution 1 Maximum capacity in Mat... View the full answer