for the year before any special orders included sales of $3,000,000 (sales price is $10 per unit.) Manufacturing cost of goods sold is anticipated to be $2,000,000. Selling expenses are expected to be $250,000, and operating income is projected at $750,000. Fixed costs included in these forecasted amounts are $1,250,000 for manufacturing cost of goods sold. Ronco is offering a special order to buy 40,000 tote bags for $8.00 each. There will be no additional selling expenses, and sufficient capacity exists to manufacture the extra tote bags.
Requirements: Prepare a incremental analysis schedule to demonstrate what amount operating income would increase or decrease as a result of accepting the special order.
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