Question: Ecosolutions income statement is presented below: Contribution Margin Income Statement Per Unit Total Sales $30 $24,000,000 Variable Costs Direct Materials 4 3,200,000 Direct Labor 5

Ecosolutions income statement is presented below:

Contribution Margin Income Statement
Per
Unit Total
Sales $30 $24,000,000
Variable Costs
Direct Materials 4 3,200,000
Direct Labor 5 4,000,000
Variable Selling Exp. 3 2,400,000
Variable Overhead 4 3,200,000
Total Variable Costs $16 $12,800,000
Contribution Margin $14 $11,200,000
Fixed Costs
Selling Costs 1,500,000
Administrative Costs 2,000,000
Total Fixed Costs $3,500,000
Before Tax Income $7,700,000

A special order to purchase 10,000 units @ 21.50 from a good customer is received. The company has the capacity to fulfill the order. If the order is accepted variable selling expenses will be $.50 per unit (there will be no commissions in the order), but a fixed administrative cost of $2,000 will be added to the new order. If the order is accepted what will be the incremental before tax income.

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