Element Boards makes skateboard wheels. Budget information regarding the current period is given below: Revenue...
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Element Boards makes skateboard wheels. Budget information regarding the current period is given below:
Revenue (200,000 wheels at $3.00 each) $600,000
Direct materials 120,000
Direct labor 220,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 70,000
The USA Skate Team has approached Element with a special order for 6,200 wheels at a price of $2.90 per wheel. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the companys orders. However, Element is operating at capacity and will incur an additional $6,000 in fixed manufacturing overhead if the order is accepted. What is the incremental net income (loss) associated with accepting the special order?
| $(2,300) | ||
| $5,890 | ||
| $(110) | ||
| $1,185 | ||
| $(200) |
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