Lorenzo shares the following information with you as you ponder different scenarios to help your client. Selling
Question:
Lorenzo shares the following information with you as you ponder different scenarios to help your client.
Selling price $7.50
Cost for paper, per unit $0.70
Cost for printing, per unit $1.10
Cost for film, per unit $0.60
Staff salaries $48,000.00
Other operating costs $12,120.00
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.
Evaluate a special-order option using correct Excel formulas. Include the following details in your response:
Calculate accurately the after-tax profitability of the special order.
Prepare an accurate contribution margin income statement for the company if the special order is accepted.
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine