Anderson Manufacturing makes a single product. Budget information regarding the current period is given below: Dye Company approaches Anderson with a special order for 15,000 units at a price of $7.50 per unit. 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 company\'s orders. However, Anderson is operating at capacity and will incur an additional S50,000 in fixed manufacturing overhead if the order is accepted. What is the incremental income (loss) associated with accepting the special order? Solution Option \"D\" is correct, Working: .

1. Anderson Manufacturing makes a single product. Budget information regarding the current
period is given below: Dye Company approaches Anderson with a special order for 15,000 units
at a price of $7.50 per unit. 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 company's orders.
However, Anderson is operating at capacity and will incur an additional S50,000 in fixed
manufacturing overhead if the order is accepted. What is the incremental income (loss)
associated with accepting the special order?
Solution
Option "D" is correct,
Working:
For Normal Accepting order
Sales 100000 800000 112500
Labor cost 150000 -22500
Labor cost 125000 -18750
variable MFg cost 235000 -35250
Fixed mfg cost 110000 0
additnal Fixed Mfg cost 0 -50000
Net income/ Loss 180000 -14000