Current Designs faces a number of important decisions that require incremental analysis. Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to pay $260 per cooler. The brewing company would pick up the coolers upon completion of the order. Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials Direct labor Variable overhead Revenues $ Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be approximately $3,100. Current Designs has sufficient capacity to produce the special order without impacting current operations. Costs $83 /unit (a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, eg.-15.000 or (15,0001) Net Income $63 /unit S $23/unit Reject Order Accept Order Net Income Increase (Decrease)
Current Designs faces a number of important decisions that require incremental analysis. Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning. These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to pay $260 per cooler. The brewing company would pick up the coolers upon completion of the order. Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. Direct materials Direct labor Variable overhead Revenues $ Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be approximately $3,100. Current Designs has sufficient capacity to produce the special order without impacting current operations. Costs $83 /unit (a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, eg.-15.000 or (15,0001) Net Income $63 /unit S $23/unit Reject Order Accept Order Net Income Increase (Decrease)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject: acounting
![Current Designs faces a number of important decisions that require incremental analysis.
Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He
was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning.
These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the
river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to
pay $260 per cooler. The brewing company would pick up the coolers upon completion of the order.
Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful
analysis, the following costs were identified.
Direct materials
Direct labor
Variable overhead
Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be
approximately $3,100. Current Designs has sufficient capacity to produce the special order without impacting current operations.
(a)
Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter
decrease in net income then enter with a negative sign preceding the number or parenthesis, e.g.-15,000 or (15,0001)
Revenues
Costs
$83 /unit
$63 /unit
$23/unit
Net Income
S
Reject Order
Accept Order
Net Income
Increase (Decrease)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fe5a73-45e4-4166-8ba1-50e355550dfc%2Fb7735daa-700b-438a-8772-f261cbb890e0%2Flqn17p_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Current Designs faces a number of important decisions that require incremental analysis.
Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He
was calling to inquire about the possibility of Current Designs producing "floating coolers" for a promotion his company was planning.
These coolers resemble kayaks but are about one-third the size. They are used to float food and beverages while paddling down the
river on a weekend leisure trip. The company would be interested in purchasing 100 coolers for the upcoming summer. It is willing to
pay $260 per cooler. The brewing company would pick up the coolers upon completion of the order.
Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful
analysis, the following costs were identified.
Direct materials
Direct labor
Variable overhead
Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be
approximately $3,100. Current Designs has sufficient capacity to produce the special order without impacting current operations.
(a)
Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter
decrease in net income then enter with a negative sign preceding the number or parenthesis, e.g.-15,000 or (15,0001)
Revenues
Costs
$83 /unit
$63 /unit
$23/unit
Net Income
S
Reject Order
Accept Order
Net Income
Increase (Decrease)
![Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful
analysis, the following costs were identified.
Direct materials
Direct labor
Variable overhead
Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be
approximately $3.100. Current Designs has sufficient capacity to produce the special order without impacting current operations.
Revenues
(a)
Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter
decrease in net income then enter with a negative sign preceding the number or parenthesis, eg.-15,000 or (15,000))
Costs
$83 /unit
$63 /unit
Net Income $
$23/unit
Save for Later
Reject Order
Current Designs should
eTextbook and Media
Accept Order
the order based on the incremental analysis
Net Income
Increase (Decrease)
Attempts: 0 of 3 used Submit Answer](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fe5a73-45e4-4166-8ba1-50e355550dfc%2Fb7735daa-700b-438a-8772-f261cbb890e0%2Fb2ye8m_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful
analysis, the following costs were identified.
Direct materials
Direct labor
Variable overhead
Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be
approximately $3.100. Current Designs has sufficient capacity to produce the special order without impacting current operations.
Revenues
(a)
Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. (Enter
decrease in net income then enter with a negative sign preceding the number or parenthesis, eg.-15,000 or (15,000))
Costs
$83 /unit
$63 /unit
Net Income $
$23/unit
Save for Later
Reject Order
Current Designs should
eTextbook and Media
Accept Order
the order based on the incremental analysis
Net Income
Increase (Decrease)
Attempts: 0 of 3 used Submit Answer
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Follow-up Question
How much does operating income increases?
If Mike wants a $4,000 profit, what's the min price it should accept for each cooler?
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