Variations Company had the following results of operations for the past year:
$$\begin{array} { | l | r | }
\hline \text { Sales } ( 8,000 \text { units at } \$ 7.00 ) & \$ 56,000 \
\hline \text { Variable manufacturing cost: } & ( 30,000 ) \
\hline \text { Fixed manufacturing costs } & ( 6,000 ) \
\hline \text { Fixed selling and administrative expenses } & \underline{( 4,500 )} \
\hline \text { Operating income } &\underline{ \$ 15,500} \
\hline
\end{array}$$ A foreign company (whose sales will not affect Variations' regular sales) offers to buy 700 units at $4.00 per unit. In addition to variable manufacturing costs, there would be an export cost of $0.30 per unit. Prepare an analysis of this additional business to show whether Variations should take this order.

Question

Variations Company had the following results of operations for the past year:
 $$\begin{array} { | l | r | } 
\hline \text { Sales } ( 8,000 \text { units at } \$ 7.00 ) & \$ 56,000 \
\hline \text { Variable manufacturing cost: } & ( 30,000 ) \
\hline \text { Fixed manufacturing costs } & ( 6,000 ) \
\hline \text { Fixed selling and administrative expenses } & \underline{( 4,500 )} \
\hline \text { Operating income } &\underline{ \$ 15,500} \
\hline
\end{array}$$ A foreign company (whose sales will not affect Variations' regular sales) offers to buy 700 units at $4.00 per unit. In addition to variable manufacturing costs, there would be an export cost of $0.30 per unit. Prepare an analysis of this additional business to show whether Variations should take this order.

Quizplus · Accepted Answer

The Answer of Variations Company had the following results of operations for the past year:
 $$\begin{array} { | l | r | } 
\hline \text { Sales } ( 8,000 \text { units at } \$ 7.00 ) & \$ 56,000 \
\hline \text { Variable manufacturing cost: } & ( 30,000 ) \
\hline \text { Fixed manufacturing costs } & ( 6,000 ) \
\hline \text { Fixed selling and administrative expenses } & \underline{( 4,500 )} \
\hline \text { Operating income } &\underline{ \$ 15,500} \
\hline
\end{array}$$ A foreign company (whose sales will not affect Variations' regular sales) offers to buy 700 units at $4.00 per unit. In addition to variable manufacturing costs, there would be an export cost of $0.30 per unit. Prepare an analysis of this additional business to show whether Variations should take this order.

Variations Company Had the Following Results of Operations for the Past