Industries has an annual plant capacity of 66,000 units; current production is 57,000 units per year. At the current production volume, the variable cost per unit is $32.00 and the fixed cost per unit is $4.50. The normal selling price of Luxe's product is $44.00 per unit. Luxe has been asked by Bramwall Company to fill a special order for 5,000 units of the product at a special sales price of $28.00 per unit.Bramwall

is located in a foreign country where Luxe does not currently operate. Bramwall will market the units in its country under its own brand name, so the special order is not expected to have any effect on Luxe's regular sales. Read the requirements

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Part 1

Requirement 1. How would accepting the special order impact

Luxe's operating income? Should

Luxe accept the special order? Complete the following incremental analysis to determine the impact on

Luxe's operating income if it accepts this special order. (Enter a "0" for any zero balances. Use parentheses or a minus sign to indicate a decrease in contribution margin and/or operating income from the special order.)

Incremental Analysis of Special Sales Order Decision	Total Order (5,000 units)
Revenue from special order
Less expenses associated with the order:
Less: Variable manufacturing cost
Contribution margin
Less: Additional fixed expenses associated with the order
Increase (decrease) in operating income from the special order

Answer rating: 100% (QA)

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