Answer:
Total effect on income= $190,000
Explanation:
Giving the following information:
Sales (500,000 units) $90,000,000
Cost of goods sold 54,000,000
Gross profit 36,000,000
Operating expenses 24,000,000
Net income $12,000,000
An analysis of costs and expenses reveals that the variable cost of goods sold is $95 per unit and variable operating expenses are $35 per unit. In September, Carney Company receives a special order for 40,000 machines at $135 each from a major coffee shop franchise. Acceptance of the order would result in $10,000 of shipping costs but no increase in fixed expenses
Because it is a special offer and there is unused capacity, we will not have into account the fixed costs.
Total unitary cost= 95 + 35 + (10,000/40,000)= 130.25
Contribution margin= 135 - 130.25= 4.75
Total effect on income= 4.75*40,000= $190,000
