Shanghai Exports, LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2014 is as follows: statement for 2014 is as follows: Shanghai Exports, LTD Budgeted Income Statement For the Year 2014 Sales ($ 44 per unit) $4,400,000 Cost of good sold ($ 32 per unit) (3,200,000) Gross profit 1,200,000 Selling expenses ($3 per unit) Net income (300,000) $900,000 Additional Information (1) Of the production costs and selling expenses, $800,000 and $100,000, respectively, are fixed. (2) Shanghai Exports, LTD received a special order from a hospital supply company offering to buy 12,500 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $32 to make a product to sell for $30." Calculate the net benefit (cost) of accepting the special order.

Shanghai Exports, LTD produces wall mounts for flat panel television sets. The forecasted income statement for 2014 is as follows: statement for 2014 is as follows: Shanghai Exports, LTD Budgeted Income Statement For the Year 2014 Sales ($ 44 per unit) $4,400,000 Cost of good sold ($ 32 per unit) (3,200,000) Gross profit 1,200,000 Selling expenses ($3 per unit) Net income (300,000) $900,000 Additional Information (1) Of the production costs and selling expenses, $800,000 and $100,000, respectively, are fixed. (2) Shanghai Exports, LTD received a special order from a hospital supply company offering to buy 12,500 wall mounts for $30. If it accepts the order, there will be no additional selling expenses, and there is currently sufficient excess capacity to fill the order. The company's sales manager argues for rejecting the order because "we are not in the business of paying $32 to make a product to sell for $30." Calculate the net benefit (cost) of accepting the special order.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...

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