Maria's Food Service provides meals that nonprofit organizationsdistribute to handicapped and elderly people. Here is herforecasted income statement for April, when she expects to produceand sell 3,200 meals:
Amount Per Unit Sales revenue $ 19,840 $ 6.20
Costs of meals produced 14,720 4.60
Gross profit $ 5,120 $ 1.60
Administrative costs 2,240 0.70
Operating profit $ 2,880 $ 0.90
Fixed costs included in this income statement are $5,120 formeal production and $640 for administrative costs. Maria hasreceived a special request from an organization sponsoring a picnicto raise funds for the Special Olympics. This organization iswilling to pay $3.60 per meal for 300 meals on April 10. Maria hassufficient idle capacity to fill this special order.
These meals will incur all of the variable costs of mealsproduced, but variable administrative costs and total fixed costswill not be affected. Required: a. What impact would accepting thisspecial order have on operating profit? (Select option "higher" or"lower", keeping Status Quo as the base. Select "none" if there isno effect.)
| 3200 Units | 3500 Units | Difference | higher or lower |
| sales revenue | | | | |
| Variable Cost: | | | | |
| Meals | | | | |
| Administrative | | | | |
| Contribution Margin | | | | |
| Fixed Cost | | | | |
| Operating Cost | | | | |
From an operating profit perspective for April, should Mariaaccept the order? Yes No
