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Big City Seat Cushions Inc. makes seat cushions for outdoor furniture .Big Citys contribution margin...

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Question

Accounting

Big City Seat Cushions Inc. makes seat cushions for outdoor furniture

.Big Citys contribution margin income statement for the month ended

March31, 2019 is presented below: Big City Seat Cushions Inc. Income Statement For the Month Ended

March 31, 2019 Sales in Units 4,200 Sales Revenue $ 58,800 Variable Costs: Manufacturing 25,200 Selling and Administrative

11,000 Total Variable Costs 36,200 Contribution Margin 22,600 Fixed Costs: Manufacturing 12,500

Selling and Administrative 8,700 Total Fixed Costs 21,200 Operating Income $ 1,400

Big City gets a phone call from World wide Outdoor Furniture

They are interested in buying 480 cushions from Big City

. Acceptance of the order will not increase

Big Citys

variable selling and

administrative

costs.

Big City

has enough unused plant capacity to manufacture the a

ddition

al

cushions

(so

no increase in fixed costs)

.

Worldwide

has offered $

7

per

cushion

, which is below the normal sales of $1

4

per

cushion

Answer & Explanation Solved by verified expert
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