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Smooth Brew manufactures cappuccino makers. For the first eight months of 2006, the company 33....

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Accounting

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Smooth Brew manufactures cappuccino makers. For the first eight months of 2006, the company 33. reported the following operating results while operating at 80% of plant capacity Sales (120,000 units) Cost of goods sold Gross profit Operating expenses Net income $6,000,000 -3,600,000 2,400,000 -1,800,000 $600,000 An analysis of costs and expenses reveals that variable cost of goods sold is $25 per unit and variable operating expenses are $10 per unit. In September. Smooth Brew received a special order for 5,000 machines at $40 each from a major coffee shop franchise. Acceptance of the order would result in $2,000 of shipping costs but no increase in fixed expenses. Instructions 1. Prepare an incremental analysis for the special order. . 2. Should Smooth Brew accept the special order

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