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.

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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                                                     $700,00

 

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

Complete the incremental analysis for the special order.  (If an amount is blank enter 0, all boxes must be filled to be correct. If the impact on net income is a decrease use either a negative sign in front of the number, e.g. -45 or parenthesis, e.g. (45). Enter all other amounts as positive amounts and subtract where necessary. Round your answers to 0 decimal places, e.g. 5,210, round your computations of unit costs to 2 decimal places, e.g. 5.25.)

1.

 

            

Reject Order               Accept Order              Net Income Increase (Decrease)

Revenues         $ BLANK                   $ BLANK                   $ BLANK

Cost of Goods Sold BLANK             BLANK                      BLANK

Operating Expense BLANK              BLANK                      BLANK

 

Net Income     $ BLANK                  $ BLANK                   $ BLANK

 

2.  Wyco Company should ____ BLANK the special order:  Reject or Accept?

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    Wyco Company Incremental Analysis Solution
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