What would be the effect on Concord’s income if the special order were accepted? Concord’s income will increase by $ ____________
Concord Company is a leading manufacturer of sunglasses. One of Concord’s products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Concord about purchasing 17,900 pairs of these sunglasses. Concord’s unit manufacturing cost, based on a full capacity of 103,000 units, is as follows:
| Direct materials | $6 | |
| Direct labor | 5 | |
| Manufacturing |
20 | |
| Total |
$31 |
Concord also incurs selling and administrative expenses of $78,640 plus $3 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Concord’s normal price for these sunglasses is $40 per pair. The sporting goods store has offered to pay $35 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid.
What would be the effect on Concord’s income if the special order were accepted?
| Concord’s income will
increase by $ ____________
|
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