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Phillips Manufacturing Corporation produces a single product, a utility bench. Budgeted amounts for the coming year are as follows:

Revenues (20,000 units at $12 each) $240,000
Direct material $40,000
Direct labor 70,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 30,000 190,000
Net income $ 50,000

Gypsum Company has offered to purchase 2,000 units of a special edition of the utility bench from Phillips at a price of $12.50 per unit. This special edition will have additional variable costs of $0.35 per unit. Phillips has the capacity to produce this order and it will not affect any of its other operations.
What is the incremental profit (loss) associated with the special order?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M969064

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