Explore BrainMass

Explore BrainMass

    Incremental Analysis

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See attached file for full problem description.

    A Company produced and sold 8,000 units of product and is operating at 80% of plant capacity.
    Unit information about its product is as follows:

    Sales Price $35
    Variable manufacturing cost $16
    Fixed manufacturing cost (48,000 / 8,000) 6 22
    Profit per unit $13.00

    The company received a proposal from a foreign company to buy 1,000 units of the company's
    product for $20 per unit, This is a one-time only order and acceptance of this proposal will not affect
    the company's regular sales. The President the company is reluctant to accept the proposal
    because he is concerned that the company will lose money on the special order. All fixed costs are
    allocated to individual products.

    Instructions
    Prepare a schedule reflecting an incremental analysis of this proposal. Indicate the effect the
    acceptance of this order might have on the company's income.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:17 pm ad1c9bdddf
    https://brainmass.com/economics/the-time-value-of-money/incremental-analysis-175109

    Attachments

    Solution Preview

    Please see the attached file

    A Company produced and sold 8,000 units of product and is operating at 80% of plant capacity.
    Unit information about its product is as follows:

    Sales Price $35
    Variable manufacturing cost $16
    Fixed manufacturing cost (48,000 / 8,000) 6 22
    Profit per unit $13.00

    The company received a proposal from a foreign company to buy 1,000 ...

    Solution Summary

    The solution explains how to prepare an incremental analysis for a special order

    $2.19

    ADVERTISEMENT