E23.3 (LO 2) Moonbeam Company manufactures toasters. For the first 8 months of 2020, the com-pany reported the following operating results while operating at 75% of plant capacity:Sales (350,000 units)Cost of goods sold$4,375,0002,600,000Gross profitOperating expenses1,775,000840,000Net income$ 935,000Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20%fixed.In September, Moonbeam receives a special order for 15,000 toasters at $7.60 each from LunaCompany of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shippingcosts but no increase in fixed costs.Instructionsa. Prepare an incremental analysis for the special order.b. Should Moonbeam accept the special order? Why or why not?

Solution: (a) Reject order Accept order Net income increase(decrease) Revenues 0 114000…

Answered: E23.3 (LO 2) Moonbeam Company…

E23.3 (LO 2) Moonbeam Company manufactures toasters. For the first 8 months of 2020, the com- pany reported the following operating results while operating at 75% of plant capacity:

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Question

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E23.3 (LO 2) Moonbeam Company manufactures toasters. For the first 8 months of 2020, the com-
pany reported the following operating results while operating at 75% of plant capacity:
Sales (350,000 units)
Cost of goods sold
$4,375,000
2,600,000
Gross profit
Operating expenses
1,775,000
840,000
Net income
$ 935,000
Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20%
fixed.
In September, Moonbeam receives a special order for 15,000 toasters at $7.60 each from Luna
Company of Ciudad Juarez. Acceptance of the order would result in an additional $3,000 of shipping
costs but no increase in fixed costs.
Instructions
a. Prepare an incremental analysis for the special order.
b. Should Moonbeam accept the special order? Why or why not?

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