Captain enterprises supplies schools with floor mattresses

Reference no: EM13605561

Captain Enterprises supplies schools with floor mattresses to use in physical education classes. Captain has received a special order from a large school district to buy 600 mats at $90 each. Acceptance of the special order will not affect fixed costs but will result in $2,400 of shipping costs. For the first 6 months of 2012, the company reported the following operating results while operating at 80% capacity: Sales (100,000 units) $14,000,000 Cost of goods sold 8,400,000 Gross profit 5,600,000 Operating expenses 4,000,000 Net income $ 1,600,000 Cost of goods sold was 70% variable and 30% fixed; operating expenses were 75% variable and 25% fixed.

Instructions

(a) Prepare an incremental analysis for the special order.

(b) Should Captain Enterprises accept the special order? Justify your answer.

Reference no: EM13605561

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