Gregg Company supplies schools with floor mattresses to use in physical education classes. Gregg has received a special order from a large school district to buy 600 mats at $45 each. Acceptance of the special order will not affect fixed costs but will result in $1,200 of shipping costs.
For the first 6 months of 2016, the company reported the following operating results while operating at 80% capacity:
Cost of goods sold was 75% variable and 25% fixed; operating expenses were 70% variable and 30% fixed.
Instructions
(a) Prepare an incremental analysis for the special order.
(b) Should Gregg Company accept the special order? Justify your answer.

Question

Gregg Company supplies schools with floor mattresses to use in physical education classes. Gregg has received a special order from a large school district to buy 600 mats at $45 each. Acceptance of the special order will not affect fixed costs but will result in $1,200 of shipping costs.
For the first 6 months of 2016, the company reported the following operating results while operating at 80% capacity:  
Cost of goods sold was 75% variable and 25% fixed; operating expenses were 70% variable and 30% fixed.
Instructions
(a) Prepare an incremental analysis for the special order.
(b) Should Gregg Company accept the special order? Justify your answer.

Quizplus · Accepted Answer

The Answer of Gregg Company supplies schools with floor mattresses to use in physical education classes. Gregg has received a special order from a large school district to buy 600 mats at $45 each. Acceptance of the special order will not affect fixed costs but will result in $1,200 of shipping costs.
For the first 6 months of 2016, the company reported the following operating results while operating at 80% capacity:  
Cost of goods sold was 75% variable and 25% fixed; operating expenses were 70% variable and 30% fixed.
Instructions
(a) Prepare an incremental analysis for the special order.
(b) Should Gregg Company accept the special order? Justify your answer.

Gregg Company Supplies Schools with Floor Mattresses to Use in Physical