MANAGERIAL ACCOUNTING HANDOUT PROBLEM 11 Score Name Section Problem (10 points) Cymbal Company produces a plastic circus set that includes a tent, circus figures, and animals. The set is sold to exclusive children's toy stores for $200. Plant capacity is 20,000 sets per year Production costs are as follows CYMBAL COMPANY COST INFORMATION FOR PRODUCING CIRCUS SET Direct materials cost per set S 20.00 Direct labor cost per set 30.00 Variable manufacturing overhead applied per set 40,00 Variable selling cost per set Total fixed manufacturing overhead cost per year 10,00 1,100,000 A prominent British store, which has not previously purchased from Cymbal, has approached the marketing manager about buying 5,000 sets for S170.00 each. No selling expenses would be incurred on this offer, but the British store wants its name in gold on a green package. This request means that Cymbal will incur an additional S2.00 cost per unit. The company is currently selling 18,000 circus sets, so acceptance of this job would require the company to reject some of its current business REQUIRED: (1) (2) What is the current operating income of Cymbal? If the company accepted this offer, what would be its operating income? Should the company accept the offer? Explain. IfCymbal was currently selling only 10,000 sets per year and wanted to car $20,000 of profit on the order, what selling price should the company charge (3) (4) the British store for the order