What is the incremental income

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Reference no: EM132849601

Question - Element Boards makes skateboard wheels. Budget information regarding the current period is given below:

Revenue (200,000 wheels at $3.00) $600,000

Direct materials 120,000

Direct labor 220,000

Variable manufacturing overhead 50,000

Fixed manufacturing overhead 70,000

The USA Skate Team has approached Element with a special order for 6,000 wheels at a price of $2.75 per wheel. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company's orders. However, Element is operating at capacity and will incur an additional $5,000 in fixed manufacturing overhead if the order is accepted. What is the incremental income (loss) associated with accepting the special order?

Reference no: EM132849601

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