{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Special Orders - Action Plan • Identify all revenues that...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Special Orders Cobb Company incurs a cost of $28 per unit, of which $18 is variable, to make a product that normally sells for $42. A foreign wholesaler offers to buy 5,000 units at $25 each. Cobb will incur shipping costs of $1 per unit. Compute the increase or decrease in net income Cobb will realize by accepting the special order, assuming Cobb has excess operating capacity. Should Cobb Company accept the special order? Solution
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Action Plan • Identify all revenues that will change as a result of accepting the order. • Identify all costs that will change as a result of accepting the order, and net this amount against the change in revenues. Reject Accept Net Income Increase (Decrease) $–0 $125,000 $125,000 –0– 95,000 * (95,000) $–0– $ 30,000 $ 30,000 Given the result of the analysis, Cobb Company should accept the special order....
View Full Document

{[ snackBarMessage ]}