He also lets you know that he's been approached by a potential client inquiring about a special order, and he wants you to advise him on whether to accept the order. The client wants 500 custom posters for $7 per poster. The posters will require a different type of paper that will cost $0.10 more per poster. The order will also require Lorenzo to pay an extra $1000 in employee costs.

I need some help, how to work out this special order?

	this is for the combined special order plus scenario option chosen for Lorenzo
	Lorenzo's Poster Shop
	Contribution Margin Income Statement
	Incremental sales	[Insert value]	Per unit
	Less: Incremental costs	[Insert value]	Per unit
	New contribution margin	[Insert value]	Per unit
	Volume	[Insert value]	units
	Total new contribution margin	[Insert value]
	Less: Additional fixed costs	[Insert value]
	New additional income	[Insert value]
	Income Tax (25%)	[Insert value]
	New net income after tax	[Insert value]
	Look the following net income after tax figures
	Original Options	Alone	with Special Order
	A	[Insert formula]	[Insert formula]
	B	[Insert formula]	[Insert formula]
	C	[Insert formula]	[Insert formula]
	D	[Insert formula]	[Insert formula]
	E	[Insert formula]	[Insert formula]
	With Price increase
	A	[Insert value]	[Insert formula]
	B	[Insert value]	[Insert formula]
	C	[Insert value]	[Insert formula]
	D	[Insert value]	[Insert formula]
	E	[Insert value]	[Insert formula]

Answer rating: 100% (QA)

To work out the special order for Lorenzos Poster Shop we need to analyze how this additional order will affect the shops finances Specifically well c... View the full answer