An analysis of costs and expenses reveals that variable

Reference no: EM13582390

Rocks Company manufactures deluxe commericial ice cream makers. For the first eight months of 2012, the company reported the following operating results while operating at 80% of plant capacity:

Sales (600,000 units) $108,000,000

Cost of Goods sold 64,800,000

Gross Profit 43,200,000

Operating Expenses 24,000,000

Net Income 19,200,000

An analysis of costs and expenses reveals that variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In March, Rocks Company receives a special order for 30,000 machines at $140 each from a major ice cream store. Acceptance of the order would result in $12,000 of shipping costs but no increase in fixed expenses.

Instructions (a) Prepare an incremental analysis for the special order. (b) Should Rocks Company accept the special order? Justify your answer.

Reference no: EM13582390

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