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Refer to our development of Framecraft Company's master budget. Suppose that because of a new customer in Canada, the company management has decided to increase budgeted sales in the first quarter by 5,000 units. The expenses for this sale will include direct materials, direct labor, variable overhead, and variable selling and administrative expenses. The delivery expense for the Canadian customer will be$0.18 per unit rather than the regular $0.08 per unit. The desired units of beginning finished goods inventory will remain at 1,000 units.
1. Using a spreadsheet, revise Framecraft's budgeted income statement and the operating budgets that support it to reflect the changes described above. (Round manu- factured cost per unit to three decimal places, and round income tax expense to the nearest dollar.)
2. What is the change in income from operations? Would you recommend accepting the order from the Canadian customer? If so, why?
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