Grill Time sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
$\begin{array}{ll}
\text { Direct materials } & \$ 52 \
\text { Direct labor } & 28 \
\text { Variable mantufacturing overhead } & 11 \
\text { Variable selling expenses } & 5\\text { Fixed manufacturing overhead }{ }^{*}&24\\text { Total cost }&\$120
\end{array}$ * $ 1,800,000 / 75,000 units
Grill Time has enough idle capacity to accept a one-time-only special order from Backyard Living,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Grill Time will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Grill Time's operating income?

Question

Grill Time sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
 $\begin{array}{ll}
\text { Direct materials } & \$ 52 \
\text { Direct labor } & 28 \
\text { Variable mantufacturing overhead } & 11 \
\text { Variable selling expenses } & 5\\text { Fixed manufacturing overhead }{ }^{*}&24\\text { Total cost }&\$120
\end{array}$ * $ 1,800,000 / 75,000 units
Grill Time has enough idle capacity to accept a one-time-only special order from Backyard Living,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Grill Time will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Grill Time's operating income?

Quizplus · Accepted Answer

The Answer of Grill Time sells its barbecue sets for $170 each.Suppose the company incurs the following average cost per barbecue set:
 $\begin{array}{ll}
\text { Direct materials } & \$ 52 \
\text { Direct labor } & 28 \
\text { Variable mantufacturing overhead } & 11 \
\text { Variable selling expenses } & 5\\text { Fixed manufacturing overhead }{ }^{*}&24\\text { Total cost }&\$120
\end{array}$ * $ 1,800,000 / 75,000 units
Grill Time has enough idle capacity to accept a one-time-only special order from Backyard Living,Inc.for 2,000 barbecue sets at a sales price of $130 per set.Grill Time will not incur $2 of variable selling expenses for this order.
How would accepting the order affect Grill Time's operating income?

Grill Time Sells Its Barbecue Sets for $170 Each * $ 1,800,000 / 75,000 Units Grill Time Has Enough

Grill Time Sells Its Barbecue Sets for $170 Each * $ 1,800,000 / 75,000 Units
Grill Time Has Enough