Kona Company manutactures plastic plates. For 2021, the company reported the following operating results while operating...

  

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Kona Company manutactures plastic plates. For 2021, the company reported the following operating results while operating at 70% of plant capacity: Sales (20,000 units) Cost of goods sold Gross profit Operating expenses S100,000 65.000 35.000 20,000 S15.000 Net income An analysis of costs and expenses reveals that variable cost of goods sold is $1.80 per unit and vanable operating expenses are $0.20 per unit. In January 2022, Kona Company receives a special order for 5,000 plates at $4 each from a major party shop. Acceptance of the order would result in $1,000 of shipping costs but no increase in fixed expenses. Instructions (a) Prepare an incremental analysis for the special order, Should Kona accept a special order? Prepare a complete work for full mark. (13 marks) (b) When do managers perform incremental analysis? What are five common types of decisions involving incremental analysis? Provide an example for each type for full mark. (12 marks) Kona Company manutactures plastic plates. For 2021, the company reported the following operating results while operating at 70% of plant capacity: Sales (20,000 units) Cost of goods sold Gross profit Operating expenses S100,000 65.000 35.000 20,000 S15.000 Net income An analysis of costs and expenses reveals that variable cost of goods sold is $1.80 per unit and vanable operating expenses are $0.20 per unit. In January 2022, Kona Company receives a special order for 5,000 plates at $4 each from a major party shop. Acceptance of the order would result in $1,000 of shipping costs but no increase in fixed expenses. Instructions (a) Prepare an incremental analysis for the special order, Should Kona accept a special order? Prepare a complete work for full mark. (13 marks) (b) When do managers perform incremental analysis? What are five common types of decisions involving incremental analysis? Provide an example for each type for full mark. (12 marks)

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Solution A few of the most common decisions of incremental analysis are Deciding betwe... View the full answer