Reference no: EM133114228

Question - Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing floating coolers for a promotion his company was planning. These coolers resemble a kayak but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 80 coolers for the upcoming summer. It is willing to pay $260 per cooler. The brewing company would pick up the coolers upon completion of the order. Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials $85 /unit Variable overhead $23 /unit Direct labor $63 /unit Fixed overhead $800 Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be approximately $1,700.

Required - Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers.