What will be the effect on Berry operating income

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Question - Berry Company produces and sells 30,000 cases of fruit preserves each year. The following information reflects a breakdown of its costs:

COST ITEM

COST PER CASE

TOTAL COSTS

Variable production costs

$13

$390,000

Fixed production costs

5

150,000

Variable selling costs

6

180,000

Fixed selling and administrative costs

10

300,000

Total costs

$34

$1,020,000

Berry marks up its prices 40% over full costs. It has surplus capacity to produce 20,000 more cases. A French supermarket company has offered to purchase 10,000 cases of the product at a special price of $42 per case.

Berry will incur additional shipping and selling costs of $4 per case to complete this order.

Required - What will be the effect on Berry's operating income if it accepts this order? Begin by determining the contribution margin per unit for this order. (Use parentheses or minus sign to show a negative contribution margin per unit.)

Reference no: EM133063096

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