Reference no: EM133018496
Question - Steve Inc. manufactures skateboards. For 2020, the company reported the following operating results while operating at 80% of plant capacity:
Sales (120,000 units) $6,000,000
Cost of goods sold 3,600,000
Gross profit 2,400,000
Operating expenses 1,800,000
Net income $600,000
An analysis of costs and expenses reveals that variable cost of goods sold is $18.50 per unit and variable operating expenses are $10 per unit.
In September, Steve Inc. received a special order for 3,500 skateboards at $32 each from a major sports shop franchise. Acceptance of the order would result in $3,000 of shipping costs but no increase in fixed expenses.
What is the financial impact of taking the order?
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