{"id":190955,"date":"2025-02-14T04:21:06","date_gmt":"2025-02-14T04:21:06","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=190955"},"modified":"2025-02-14T04:21:08","modified_gmt":"2025-02-14T04:21:08","slug":"moonbeam-company-manufactures-toasters","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/14\/moonbeam-company-manufactures-toasters\/","title":{"rendered":"Moonbeam Company manufactures toasters"},"content":{"rendered":"\n<p>E7-3 Moonbeam Company manufactures toasters. For the first &amp; months of 2017, the company reported the following operating results while operating at 75% of plant capacity: fo<br>Sales (350,000 units)<br>$4,375,000<br>Cost of goods sold<br>2,600,000<br>1,775,000<br>840,000<br>Gross profit<br>Operating expenses<br>$ 935,000<br>Net Income<br>Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed.<br>In September, Moonbeam receives a special order for 15,000 toasters at $7.60 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an addi tional $3,000 of shipping costs but no increase in fixed costs.<br>Instructions<br>(a) Prepare an incremental analysis for the special order.<br>(b) Should Moonbeam accept the special order? Why or why not?<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>The incremental analysis shows that accepting the special order would result in an incremental net income of $4,200. Since the special order contributes positively to the company&#8217;s profitability and does not increase fixed costs, Moonbeam Company should accept the order.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>Moonbeam Company is operating at 75% capacity, meaning it has unused production capacity. When evaluating a special order, only incremental costs and revenues should be considered. Fixed costs remain unchanged and are not relevant for this decision.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Revenue from Special Order<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The special order is for 15,000 toasters at $7.60 each.<\/li>\n\n\n\n<li>Total additional revenue:<br>[<br>15,000 \\times 7.60 = 114,000<br>]<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Incremental Costs<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cost of Goods Sold (COGS) is 70% variable. The variable cost per unit is calculated from the total COGS and the number of units produced.<\/li>\n\n\n\n<li>Operating expenses are 80% variable. The variable portion per unit is calculated similarly.<\/li>\n\n\n\n<li>Additional shipping costs amount to $3,000. Total variable cost per unit = Variable COGS per unit + Variable Operating Expense per unit.<br>Multiplying this by 15,000 units gives total incremental variable costs of $106,800. Adding the shipping cost of $3,000 results in total incremental costs of $109,800.<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Profit Impact<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Incremental revenue: $114,000<\/li>\n\n\n\n<li>Total incremental costs: $109,800<\/li>\n\n\n\n<li>Net incremental income: $4,200<\/li>\n<\/ul>\n\n\n\n<p>Since the special order results in a profit increase of $4,200 and does not affect fixed costs, accepting it is beneficial as long as it does not interfere with regular sales.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>E7-3 Moonbeam Company manufactures toasters. For the first &amp; months of 2017, the company reported the following operating results while operating at 75% of plant capacity: foSales (350,000 units)$4,375,000Cost of goods sold2,600,0001,775,000840,000Gross profitOperating expenses$ 935,000Net IncomeCost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed.In September, Moonbeam [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-190955","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/190955","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=190955"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/190955\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=190955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=190955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=190955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}