Reference no: EM132809180

Marshall Co. manufactures tote bags. The forecasted income statement for the year before any special orders included sales of $3,300,000 (sales price is $10 per unit.)

Manufacturing cost of goods sold is anticipated to be $2,290,000.

Selling expenses are expected to be $300,000, and

operating income is projected at $710,000.

Fixed costs included in these forecasted amounts are $1,300,000 for manufacturing cost of goods sold.

Pro Co is offering a special order to buy 30,000 tote bags for $6.00 each. There will be no additional selling expenses, and sufficient capacity exists to manufacture the extra tote bags.

Requirements:

Problem 1: Prepare an incremental analysis schedule to demonstrate what amount operating income would increase or decrease as a result of accepting the special order.