One of the industrial companies produces and sells product (B). The following is the income statement prepared
Question:
One of the industrial companies produces and sells product (B). The following is the income statement prepared by the company for the current year:
250000 | 115000 15000 50000 | Sales (25,000 units) The cost of raw materials Indirect variable manufacturing costs Fixed manufacturing costs |
70000 | Gross profit | |
7500 12500 10000 35000 | Commission sales Other variable selling costs Fixed selling costs Administrative costs | |
5000 | Net profit |
• The company received an offer from a customer to buy 9,000 units at a price of 8 riyals per unit. The company's unused production capacity is sufficient to cover the order. This order requires additional packaging operations costing 01 riyals per unit in addition to renting a packing machine at a cost of 18,000 riyals, but the company will not bear the variable selling costs of this order.
Required:
• Preparing the income statement for the current year on the basis of the contribution.
• Do you advise the company to accept the order? Support your opinion with the necessary accounts.
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell