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# Incremental Analysis

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If an incremental analysis looks like this:
Reject Accept Net Income
Order Order Increase(Decrease)
Revenues
Costs
Net Income

How do I go about solving this problem? Do I need to worry about Margin per unit/dollars?

Carter Company manufactures cappuccino makers. For the first eight months of 2004 the company reported the following operating results while operating at 80% of plant capacity:

Sales (500,000 units) \$75,000,000
Cost of goods sold 45,000,000
Gross profit 30,000,000
Operating expenses 24,000,000
Net income \$ 6,000,000

An analysis of costs and expenses reveals that variable cost of goods sold is \$80 per unit and variable operating expenses are \$30 per unit.

In September, Carter Company receives a special order for 40,000 machines at \$120 each from a major coffee shop franchise. Acceptance of the order would result in \$10,000 of shipping costs but no increase in fixed expenses.

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