60.1K

Verified Solution

Link Copied!

Current Attempt in Progress Blossom Fiber Company is the creator of Y-Go, a technology that weaves silver into its fabrics to kill bacteria and odor on clothing while managing heat. Y-Go has become very popular in undergarments for sports activities. Operating at capacity, the company can produce 1,031,000 Y-Go undergarments a year. The per unit and the total costs for an individual garment when the company operates at full capacity are as follows. Per Undergarment Total Direct materials $2.04 $2,103,240 Direct labor 0.40 412,400 Variable manufacturing overhead 1.04 1,072,240 Fixed manufacturing overhead 1.44 1,484,640 Variable selling expenses 0.34 350,540 Totals $5.26 $5,423,060 The U.S. Army has approached Blossom Fiber and expressed an interest in purchasing 250,100 Y-Go undergarments for soldiers in extremely warm climates. The Army would pay the unit cost for direct materials, direct labor, and variable manufacturing overhead costs. In addition, the Army has agreed to pay an additional $0.95 per undergarment to cover all other costs and provide a profit. Presently, Blossom Fiber is operating at 70% capacity and does not have any other potential buyers for Y-Go. If Blossom Fiber accepts the Army's offer, it will not incur any variable selling expenses related to this order. Prepare an incremental analysis for the Blossom Fiber. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheseseg: (45) Reject Order Accept Order Net Income Increase (Decrease) Revenues $ Variable costs: Direct materials Direct labor Variable overhead Total variable costs Net income $ $ Should Blossom Fiber accept the Army's offer? Blossom Fiber should the Army's offer

Answer & Explanation Solved by verified expert

See Answer