(Solved) : Wyco Company Manufactures Toasters For The First 8 Months Of . . .

Wyco Company manufactures toasters. For the first 8 months of 2011, the company reported the following operating results while operating at 75% of plant capacity.

Sales (400,000 units) … .$4,000,000

Cost of goods sold …..2,400,000

Gross profit ……..1,600,000

Operating expenses …… 900,000

Net income ………$ 700,000

Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 60% variable and 40% fixed.

In September, Wyco Company receives a special order for 40,000 toasters at $6.00 each from Salono Company of Mexico City. Acceptance of the order would result in $8,000 of shipping costs but no increase in fixed operating expenses.

Instructions

(a) Prepare an incremental analysis for the special order.

(b) Should Wyco Company accept the special order? Why or why not?

Expert Answer

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