What will be the effect on Jet’s profit of accepting the whole special order if Jet is close to capacity and making 7,500 units but the foreign company goes direct to the CEO (bypassing the sales department)? Capacity is 10000 units.

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Jet is considering a special order Jet, Inc. Contribution Income Statement (without special order) Revenue (5,000 × $20) $ 100,000 Variable costs: Direct materials Direct labor Manufacturing overhead Marketing costs Total variable costs Contribution margin $ 20,000 5,000 10,000 5,000 Fixed costs: Manufacturing overhead $ 28,000 20,000 Marketing costs Total fixed costs Net operating income 40,000 60,000 48,000 $ 12,000 Jet is considering a special order Jet, Inc. Contribution Income Statement (without special order) Revenue (5,000 × $20) $ 100,000 Variable costs: Direct materials Direct labor Manufacturing overhead Marketing costs Total variable costs Contribution margin $ 20,000 5,000 10,000 5,000 Fixed costs: Manufacturing overhead $ 28,000 20,000 Marketing costs Total fixed costs Net operating income 40,000 60,000 48,000 $ 12,000

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To determine the effect on Jets profit of accepting the whole special order we need to calculate the incremental contribution margin from the special ... View the full answer