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 @ 22 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 $.60 per unit (there will be no commissions in the order), but a fixed administrative cost of $2,500 will be added to the new order. If the order is accepted what will be the incremental before tax income.
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