Calculate the effect on Lakeside operating income

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Question - Lakeside Inc. produces a product that currently sells for $68.00 per unit. Current production costs per unit include direct materials, $18; direct labor, $20; variable overhead, $9.00; and fixed overhead, $9.00. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit. Lakeside has received an offer from a nonprofit organization to buy 8,800 units at $48.40 per unit. Lakeside currently has unused production capacity. Calculate the effect on Lakeside's operating income of accepting the order from the nonprofit organization.

Reference no: EM132849558

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