Answer:
Net income from special order $1,012.30
Explanation:
<em>The amount net income from the special order is the difference between the revenue and the relevant cost of variable cost of the special order and any additional fixed cost</em>
<em>The relevant cash flow for the special order are :</em>
<em>I. the incremental contribution from of producing 18, 500 toasters</em>
<em>2. The incremental fixed cost shipping cost of $3,000</em>
<em>3 . Sales revenue</em>
Variable cost of goods sold = 77%× 2,595,000=1,99,8150
Variable operating expenses = 23% × 839,300 = <u>730,191</u>
Total variable cost <u> 2,728,341</u>
<em>Incremental contribution :</em>
Sales revenue - (18,500 × $8.03 ) 148,555
Variable cost of order:
(18500/349,200× 2728341) (144,542.69)
Shipping cost <u> ( 3,000)</u>
Net income from special order <u> 1,012.30</u>
<em>Note that every other fixed costs would be irrelevant because they would be incurred either way </em>
