Lemon Company produces and sells 25,000 bottles of lemonade each year. The following information reflects...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Lemon Company produces and sells 25,000 bottles of lemonade each year. The following information reflects a breakdown of its costs:
Cost Item | Costs per Bottle | Total Costs |
Variable production costs | $12 | $300,000 |
Fixed production costs | $8 | $200,000 |
Variable selling costs | $6 | $150,000 |
Fixed selling and administrative costs | $4 | $100,000 |
Total costs | $30 | $750,000 |
Lemon marks up its prices 45% over full costs. It has surplus capacity to produce 15,000 more bottles. A Dutch supermarket company has offered to purchase 10,000 bottles of the product at a special price of $32 per bottle. Lemon will incur additional shipping and selling costs of $1 per bottle to complete this order.
Required: (a) What will be the effect on Lemon's operating income if it accepts this order? (b) Determine the incremental profit from accepting the order.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.